2022 ended with a bang for Argo Blockchain (ARBK). The year’s last 5 sessions saw the shares climb 110% higher. Yet, as an illustration of how damaging the year was for the struggling crypto miner, even after the huge gains, the shares still saw out the year 91% into the red.
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So, what happened to send the shares soaring? Well, the company seems to have been thrown a lifeline by a noted crypto bigwig.
Galaxy Digital, billionaire Mike Novagratz’s crypto investment fund, will buy the company’s Helios mining facility in Dickens Country, Texas – which includes a 200MW immersion bitcoin mining building in operation only since May 2022 – for $65 million. The company will also be the recipient of a new $35 million loan with Argo’s mining hardware acting as collateral.
The deal includes disposing of all current Argo debt, and the company will get a two-year hosting arrangement with Galaxy, with its fleet of 23,619 Bitmain S19J Pro machines set to continue running at the facility without interruption.
“The deal preserves the current operating structure of the company, relieves the debt burden, and prevents a bankruptcy filing,” says H.C. Wainwright’s Kevin Dede.
However, that does not mean the company is out of the woods just yet. “While the view to Argo’s balance sheet is now clearer,” Dede went on to say, “the company’s income statement remains far less transparent. Argo has not disclosed its hosting costs, which we suspect remain variable given Galaxy does not yet have a PPA in place for the Helios facility, nor do we have insight on the new cost of debt.”
As such, with no September quarter numbers yet to see the light of day, and “little view” to Argo’s P/L, Dede prefers staying on the sidelines for now. The analyst intends to reassess his model once the September figures are released, and the company can provide a “baseline for hosting cost calculations.” Accordingly, Dede reiterated a Neutral rating without providing a fixed price target for the shares. (To watch Dede’s track record, click here)
Elsewhere, the stock receives an additional 4 Holds and 2 Sells from the Wall Street experts, making the consensus view here a Moderate Sell. The average target stands at $0.81, suggesting the stock will fall 25% lower over the coming months. (See Argo Blockchain stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
