MARA, COIN, or RIOT: Which Crypto Stock Does Wall Street Still Find Compelling?
Stock Analysis & Ideas

MARA, COIN, or RIOT: Which Crypto Stock Does Wall Street Still Find Compelling?

Story Highlights

Several crypto stocks have significantly risen this year on improved sentiment. Here, we will discuss Wall Street’s opinions about three crypto names.

The cryptocurrency market rebounded well this year after a disastrous run last year. In particular, Bitcoin (BTC-USD), the largest cryptocurrency by market capitalization, has rallied over 80% so far in 2023 on improved investor sentiment. Meanwhile, concerns about the risks associated with the crypto market and the need for stringent regulations remain. Against this backdrop, we used Tipranks’ Stock Comparison Tool to pit Marathon Digital (NASDAQ:MARA), Coinbase Global (NASDAQ:COIN), and Riot Platforms (NASDAQ:RIOT) against each other to pick the most attractive crypto stock as per Wall Street pros, even as these stocks have rallied significantly year-to-date.   

Marathon Digital (NASDAQ:MARA)

A sharp decline in Bitcoin prices due to macro pressures, the FTX collapse, and high energy costs adversely impacted crypto miner Marathon Digital’s 2022 performance. The company’s loss per share ballooned to $6.05 in 2022 from $0.37 in 2021.

Nonetheless, Marathon is taking the required steps to strengthen its financial position and enhance its productivity. The company aims to energize its previously purchased mining rigs, with the aim to achieve its target capacity of 23 exahashes per second (EH/S) by the middle of this year.

In Q1 2023, the company’s operational hash rate increased by 64% from 7 EH/s to 11.5 EH/s. The improved hash rate helped in boosting Bitcoin production by 41% from Q4 2022 to 2,195 Bitcoin in Q1 2023, including 825 BTC in March.

Marathon is also focused on being energy efficient through the use of the S-19 XP mining equipment. Once all the previously purchased miners are installed, Marathon expects about 66% of its hash rate to be generated by S19 XPs, which are nearly 30% more energy efficient than the prior generation of mining rigs.      

Is MARA Stock a Buy or Sell?

Wall Street’s Strong Buy consensus rating for Marathon Digital stock is based on three Buys and one Hold. The average stock price target of $10 suggests that the stock could be range-bound. Marathon shares have rallied nearly 191% year-to-date.

Coinbase Global (NASDAQ:COIN)

The turmoil in the crypto market last year dragged down the performance of the leading U.S. crypto exchange Coinbase. The company slipped into a loss of $2.46 per share in Q4 2022 compared to EPS of $3.32, due to a 75% decline in revenue to $629 million. However, both metrics were better than analysts’ expectations.

Nonetheless, Coinbase’s shrinking customer base and decline in trading volumes in the fourth quarter were concerning. Meanwhile, the company’s efforts to diversify its revenue base are fetching results, given the traction in products like Staking, Earn, and Custody. Coinbase is also taking initiatives, including reducing its workforce, to bring down costs.  

What is the Price Target of Coinbase Stock?

This week, Needham analyst John Todaro reiterated a Sell rating on Coinbase stock ahead of its first-quarter results. Todaro noted that transaction volumes remain at a fraction of peak levels, although they have risen modestly from year-end levels.

The analyst feels that the company’s actions to “right-size its expense base” would drive better results this year. Nonetheless, he feels that “substantial retail pricing compression is only a matter of time” and finds it difficult to expect the company to move towards significant long-term profitability.

Todaro also feels that the SEC Wells notice received by Coinbase in the first quarter reflects the “massive regulatory risks” that the company’s business model is facing.

Wall Street is sidelined on Coinbase, with a Hold consensus rating based on seven Buys, seven Holds, and Seven Sells. Following the staggering 92% year-to-date rally, the average price target of $63.40 suggests a possible downside of 6.5%. 

Riot Platforms (RIOT)

Bitcoin miner Riot Platforms’ net loss increased significantly in 2022 to $3.65 per share from $0.17 per share in 2021, mainly due to non-cash impairment charges of $538.6 million related to goodwill, Bitcoin, and miner impairments triggered by the decline in market prices of miners due to the slump in Bitcoin price.

Nonetheless, the company’s hash rate capacity surged 213% to 9.7 EH/s as of December 31, 2022. Severe winter storms in late December damaged two of the company’s buildings at the Rockdale Facility, causing a delay in its plan to achieve a self-mining hash rate capacity of 12.4 EH/s in Q1 2023 to the second half of this year.

By the end of Q1 2023, Riot’s hash rate capacity improved to 10.5 EH/s, even after excluding 17,040 miners that were offline due to the damage to Building G from the severe winter weather in late December 2022.     

Is Riot Platforms a Good Buy?

Following the Q1 2023 Bitcoin production update, Needham’s Todaro raised his 2023 revenue and adjusted EBITDA estimates for Riot, driven by higher Bitcoin prices due to “1) banking-related concerns; 2) recent global trade deals that hint at weakening USD reserve status; and 3) BTC new issuance supply cuts after the Halving in Q1 ’24.”

Todaro reiterated a Buy rating on Riot Platforms and raised the price target to $15 from $9. The analyst believes that Riot deserves a premium valuation to its peers, given its operational scalability, liquidity, and solid balance sheet.

Wall Street’s Strong Buy consensus rating on RIOT stock is based on eight unanimous buys. Following a 264% jump in the stock so far this year, the average price target of $10 suggests a possible downside of 19% from current levels.

Conclusion

Analysts are very bullish on Marathon Digital and Riot Platforms but remain sidelined on Coinbase. Riot Platforms shares have outperformed the other two stocks so far in 2023. However, Wall Street’s average price target does not indicate more upside in Riot from current levels. Meanwhile, analysts’ average price target implies Marathon shares could be range-bound. The highest price target is $12 in the case of Riot and $15 for Marathon, which implies there is more room to run as per the most bullish analyst for these stocks.

While several crypto stocks have delivered impressive year-to-date returns, investors need to be aware of the highly volatile and risky nature of the crypto market.   

Disclosure

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