It has been a challenging year for crypto investors. The two biggest cryptocurrencies, bitcoin and Ethereum, have declined more than 65% year-to-date. The downfall of FTX, one of the largest cryptocurrency exchanges, jolted the crypto market two weeks ago. Its $32 billion valuation evaporated as the company filed for bankruptcy as its liquidity dried up.
The deteriorating macroeconomic conditions primarily affected the crypto market. The soaring inflation and punishing interest rate hikes led to investors taking a risk-aversive stance.
A team led by Nikolaos Panigirtzoglou in a research note said, “With the crypto market cap standing at just above $1 trillion before the FTX/Alameda Research collapse, our guess is that the crypto market will find a floor above $500 billion in the current deleveraging phase.”
Given this background, it would be wise for investors to avoid struggling crypto-focused stocks Block, Inc. (SQ), Coinbase Global, Inc. (COIN), and Riot Blockchain, Inc. (RIOT).
Block, Inc. (SQ)
SQ and its subsidiaries create tools enabling sellers to accept card payments and provide reporting, analytics, and next-day settlement. It offers various hardware products, software products, and a developer platform.
SQ’s operating loss for the fiscal third quarter ended September 30, 2022, came in at $48.79 million, compared to an operating income of $22.99 million. Its total operating expenses increased 45.5% year-over-year to $1.61 billion.
Its net loss attributable to common stockholders came in at $14.71 million, compared to a net income attributable to common stockholders of $84K in the year-ago period. In addition, its total liabilities increased 7.5% to $12.59 billion, compared to $11.71 billion for the fiscal year ended December 31, 2021.
SQ’s EPS and revenue for the fiscal period ending December 31, 2022, are expected to decline 36.1% and 0.8% year-over-year to $1.09 and $17.52 billion, respectively. Over the past year, the stock has fallen 70.3% to close the last trading session at $62.72.
SQ’s POWR Ratings reflect bleak prospects. The stock has an overall rating of D, equating to a Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the F-rated Financial Services (Enterprise) industry, it is ranked #80 out of 105 stocks. The company has a D grade for Momentum, Stability, and Quality.
Click here to see the additional POWR Ratings of SQ for Growth, Value, and Sentiment.
Coinbase Global, Inc. (COIN)
COIN provides financial infrastructure and technology for the crypto economy worldwide. The company offers the primary financial account in the crypto economy for retailers; and technology and services that enable ecosystem partners to build crypto-based applications and securely accept crypto assets as payment.
For the fiscal third quarter ended September 30, 2022, COIN’s total revenue declined 55% year-over-year to $590.34 million. The company’s net loss attributable to common shareholders came in at $544.63 million, compared to a net income attributable to common shareholders of $405.34 million in the year-ago period.
Its adjusted EBITDA loss came in at $115.89 million, compared to an adjusted EBITDA of $618.22 million in the prior-year quarter. Additionally, its loss per share came in at $2.43, compared to an EPS of $1.62.
Analysts expect COIN’s loss per share for the quarter ending December 31, 2022, is expected to remain negative. Its revenue for the quarter ending December 31, 2022, is expected to decline 75% year-over-year to $624.12 million. The stock has fallen 82.8% year-to-date to close the last trading session at $43.39.
COIN’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. It is ranked last in the Software - Application industry. In addition, it has an F for Growth, Stability, and Sentiment.
We have also given COIN grades for Value, Momentum, and Quality. Get all COIN ratings here.
Riot Blockchain, Inc. (RIOT)
RIOT focuses on bitcoin mining operations in North America. It operates through Bitcoin Mining, Data Center Hosting, and Electrical Products and Engineering segments.
For the fiscal third quarter ended September 30, 2022, RIOT’s total revenue declined 28.6% year-over-year to $46.29 million. The company’s net loss widened 138.3% year-over-year to $36.57 million. Moreover, its adjusted EBITDA declined 99.6% year-over-year to $166K, while its net loss per share widened 50% from the prior-year period to $0.24.
RIOT’s EPS for the quarter ending December 31, 2022, is expected to remain negative. Its revenue for the same quarter is expected to decline 26.8% year-over-year to $66.48 million. The stock has fallen 82.1% year-to-date to close the last trading session at $3.99.
RIOT’s grim outlook is reflected in its POWR Ratings. The company has an overall rating of F, which equates to a Strong Sell. It is ranked last in the Technology - Services industry. In addition, it has an F grade for Stability, Sentiment, and Quality and a D for Value and Momentum.
Click here to see RIOT’s rating for Growth.
SQ shares were trading at $64.15 per share on Wednesday afternoon, up $1.43 (+2.28%). Year-to-date, SQ has declined -60.28%, versus a -14.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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