Only Ride Marathon Digital Stock’s ‘Ups’ If You Can Handle the ‘Downs’

All stocks have peaks and valleys. However, it requires a strong stomach, or better yet, proper planning and preparation to successfully invest in Marathon Digital (NASDAQ:MARA) stock.

We’re assigning the stock a “B” grade as Marathon Digital is an intriguing, tech-forward cryptocurrency miner with decent financials.

Without a doubt, some investors bought MARA stock after the Securities and Exchange Commission approved spot Bitcoin (BTC-USD) exchange-traded funds. Maybe they got caught up in the Bitcoin hype, heard about the upcoming “halving” event and suddenly became interested in Bitcoin miners.

We encourage prospective investors to conduct deep due diligence on Marathon Digital before making any decisions with their capital. Trading crypto-mining stocks is serious business, and it’s really not meant for dabblers.

If you’re fully informed and have a solid strategy in place, however, then perhaps you can handle the high-risk, high-potential-reward profile of Marathon Digital stock.

Marathon Digital Takes Crypto-Mining and Data-Center Tech Seriously

In the blockchain sector and elsewhere, we want you to invest in the best and forget about the rest. It’s fair to say that Marathon Digital is among the best U.S.-based cryptocurrency miners. We’re not looking at a fly-by-night operation here.

For one thing, Marathon Digital appears to be in decent financial shape. The company had $357.3 million worth of unrestricted cash and cash equivalents on its balance sheet at the end of 2023. Marathon Digital has been profitable and beat Wall Street’s consensus EPS estimates for the past couple of quarters.

Our research also found that Marathon Digital is a tech innovator in some ways. For example, the company recently introduced firmware called MARAFW and a control board called MARA UCB 2100. These, according to Marathon Digital, are “designed to improve the performance, efficiency, and versatility of various Bitcoin mining rigs.”

Marathon Digital unveiled MARA 2PIC700, a powerful but efficient “two-phase immersion cooling system” for data centers.

Impressively, MARA 2PIC700 “enables two to four times the power density and can reduce the space requirements for a data center by up to 75%” in comparison to current alternatives.

Marathon Digital: High Beta Could Provide Alpha

If “alpha” represents an asset’s outperformance when compared to a benchmark such as the S&P 500, then it’s fine to seek alpha in one’s investments. Yet, it’s also important to consider an asset’s “beta,” which shows how fast an asset moves when compared to a benchmark.

Frankly, not everyone ought to own assets that are high-beta or fast moving. Bitcoin and spot Bitcoin ETFs are already high beta assets. Marathon Digital stock will sometimes magnify Bitcoin’s price moves. For defensive investors, it may be too hot to handle.

One source states MARA stock has a five-year monthly beta of 5.4. In other words, the stock has historically moved 5.4 times as fast as the S&P 500.

We’ll acknowledge that an investment in Marathon Digital is de-risked because the company has decent financials. This doesn’t mean it’s completely safe to own Marathon Digital stock, though. So, always consider a stock’s beta in your pursuit of alpha.

Marathon Digital Stock: An Intriguing Mix of Volatility and Opportunity

Clearly, Marathon Digital is an active and ambitious cryptocurrency miner. It’s also a forward-looking, envelope-pushing tech innovator. You just never know what Marathon Digital might do next, or how far the company’s stock might move.

That’s exciting for alpha seekers, but remember the concept of beta. It’s an essential concept to consider if you’re thinking about buying any high-volatility asset.

Ultimately, there’s a lot to like about Marathon Digital as a company. We’re assigning a “B” grade to Marathon Digital stock and expect it to make big moves in both directions. Hence, be sure to research Marathon Digital thoroughly and if you buy shares, keep your position size appropriately small.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.