Investment Bank Compass Point degraded Mara Holdings (Mara) to a neutral sales note on Tuesday, citing unusual cash burns.
“There are better ways to get BTC Beta,” analysts wrote in the research note, highlighting the marathon hash price, now less than 5.5 cents, as a signal for lower profitability. At the current operational levels, Compass Point considers that the company is faced with significant cash burns which could lead to a dilution of shareholders.
The bank has also reduced the Mara course target to $ 9.50, compared to $ 25, which suggests more than 25% compared to the current price almost $ 13.
Marathon’s activity is based on Bitcoin exploitation, a process that wins BTC in exchange for the computing power. However, as the mining awards shrink and the energy costs persist, the economy of the business model has undergone pressure. Meanwhile, Compass Point argues that Marathon is negotiated at a price higher than the price of Bitcoin itself – an unfavorable configuration for investors who are looking for an exposure to the assets.
The demotion also occurs in the middle of a wider collapse of high performance computer (HPC) and IA infrastructure parts. Peers Core Scientific (Corz) and Terawulf (WULF) companies also underperformed the year at the start of the year because the enthusiasm of investors around AI has cooled. The concerns about the concentration of customers, the risks of pricing and the slowdown in capital expenses of giants like Microsoft have lowered the evaluations, with multiple HPC sectorals going from 15 times last year to around 5x today.
However, Compass Point noted potential tail winds for the long -term sector, including the growing AI infrastructure demand and CAPEX commitments of cloud suppliers. But for the moment, they argue that the fundamentals of marathon remain too weak to justify its market assessment.
Mara published results on May 8 after the market. The action dropped by 25% this year, while a Bitcoin mining ETF WGMI fell by 37%.
Update (May 6, 16:27 UTC): Updates the headlines and adds Mara’s profit time.
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