The Investment Bank Compass Point dropped to Mara Holdings (Mara) with a sales mark from neutral on Tuesday, citing unstable cash burns.
“There are better ways to get BTC beta,” the analysts in the research record, pointing to the marathon hash price, which is below 5.5 cents, as a signal of denial of profitability. At current operational levels, the Compass Point estimates that the company is facing significant cash burns that may lead to the seaming of the shareholder.
The bank has tasted Mara’s price target at $ 9.50 from $ 25, suggesting more than 25% downside from a current price of close to $ 13.
The marathon business depends on bitcoin mining, a process that earns BTC in exchange for computing strength. However, as the mining rewards continue and energy costs continue, the business model economy is under pressure. Meanwhile, the Compass Point argued that the marathon was trading at a premium on the price of bitcoin itself -an unwanted setup for investors looking for exposure to ownership.
The fall also came in the middle of a broader fall in high-performance computing (HPC) and playing AI infrastructure. Peer Core Scientific (Corz) and Terawulf (WULF) companies are also unchanged during the year-to-date as investor’s enthusiasm around AI has cooled. Customer concentration concerns, pricing risks, and slowing capital expenditures from giants such as Microsoft have dragged values, with HPC sectors coming down from as high as 15x last year to nearly 5x today.
However, the compass point noted potential tailwinds for the sector in the long run, including rising demand for AI infrastructure and Capex’s promises from cloud providers. But for now, they are focusing on the basis of the marathon remains vulnerable to justify market appreciation.
Mara reports revenues on May 8, post-market. The stock fell 25% this year, while a Bitcoin Mining ETF, WGMI, fell 37%.
Update (May 6, 16:27 UTC): headlines updates and added Mara’s income time.
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