It has been a challenging year for the cryptocurrency market. The crypto market has lost more than $1.4 trillion in value this year as the rising interest rate environment and recession fears kept investors away from highly risky assets. Two of the biggest cryptocurrencies, bitcoin and Ethereum, have fallen more than 63% year-to-date.
The impact of the collapse of the crypto exchange FTX has further dampened investor sentiment about cryptocurrency, dragging down major digital currencies. FTX’s $32 billion valuation went up in smoke as the company’s liquidity dried up, and it filed for bankruptcy.
Once valued at roughly $3 trillion, the crypto market now sits at around $900 billion. Consequently, companies have cut advertising expenses, with top crypto advertisers spending just $35 million on ads in the third quarter of this year, an 80% drop from the first quarter, according to MediaRadar.
Although the Fed Chairman indicated slowing the pace of rate increases, the prospects of a recession next year are still high. Investors’ risk-off approach could put further pressure on the cryptocurrency market.
Thus, it could be wise to steer clear of fundamentally weak crypto-exposed stocks Coinbase Global, Inc. (COIN), Robinhood Markets, Inc. (HOOD), Riot Blockchain, Inc. (RIOT), and Marathon Digital Holdings, Inc. (MARA).
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 in the year-ago period.
Analysts expect COIN’s loss per share for the quarter ending December 31, 2022, to remain negative. Its revenue for the same quarter is expected to decline 75% year-over-year to $624.12 million. The stock has fallen 81.9% year-to-date to close the last trading session at $45.73.
COIN’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked last out of 139 stocks in the F-rated Software - Application industry. It has an F grade for Growth, Stability, and Sentiment and a D for Value and Quality.
Click here to see COIN’s rating for Momentum.
Robinhood Markets, Inc. (HOOD)
HOOD operates a financial services platform that allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. The company also offers various learning and education solutions comprising Snacks, Learn, Newsfeed, and cash management services.
HOOD’s total net revenues for the fiscal third quarter ended September 30, 2022, declined 1% year-over-year to $361 million. Its net loss narrowed 87% year-over-year to $175 million. Additionally, its loss per share narrowed 90.3% year-over-year to $0.20.
HOOD’s EPS for the quarter ending December 31, 2022, is expected to remain negative. Its revenue for fiscal 2022 is expected to decline 24.5% year-over-year to $1.37 billion. The stock has fallen 46% year-to-date to close the last trading session at $9.59.
HOOD’s grim outlook is reflected in its POWR Ratings. The stock has an overall rating of D, which translates to a Sell in our proprietary rating system. Within the same industry, it is ranked #111 out of 139 stocks. The company has an F grade for Stability and a D for Value and Quality.
Click here to see the additional POWR Ratings of HOOD for Growth, Momentum, and Sentiment.
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 28.1% year-over-year to $65.34 million. It failed to surpass consensus EPS estimates in three of the trailing four quarters. The stock has fallen 79.2% year-to-date to close the last trading session at $4.65.
RIOT’s negative prospects are reflected in its POWR Ratings. The stock 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.
Click here to see the additional ratings of RIOT for Growth and Momentum.
Marathon Digital Holdings, Inc. (MARA)
MARA operates as a digital asset technology company that mines cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets.
For the fiscal third quarter ended September 30, 2022, MARA’s revenues decreased 75.5% year-over-year to $12.69 million. The company’s net loss widened 240.2% year-over-year to $75.42 million. Its adjusted EBITDA loss came in at $8.70 million, compared to an adjusted EBITDA of $78.78 million in the prior-year quarter. In addition, its net loss per share widened 195.5% year-over-year to $0.65.
MARA’s EPS for the quarter ending December 31, 2022, is to be negative. Its revenue for the quarter ending December 31, 2022, is expected to decline 20.7% year-over-year to $47.82 million. It failed to surpass Street EPS estimates in each of the trailing four quarters. The stock has fallen 80.8% year-to-date to close the last trading session at $6.32.
MARA’s bleak prospects 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. In addition, it has an F for Value, Stability, Sentiment, and Quality and a D for Growth.
Click here to see MARA’s rating for Momentum.
COIN shares were trading at $45.28 per share on Thursday morning, down $0.45 (-0.98%). Year-to-date, COIN has declined -82.06%, versus a -13.44% 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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