Argo Blockchain’s (ARBK) stock price will be in the spotlight this week as the company publishes its first-quarter financial results on Thursday. The earnings come at a time when its stock is hovering near the year-to-date low of $1.29 and when most Bitcoin mining companies are going through challenges as the mining difficulty rises.
Argo Blockchain earnings ahead
Like other Bitcoin mining companies, Argo Blockchain will likely report improved financial results because of BTC’s performance in the first quarter. Indeed, most companies in the industry like Marathon Digital, Riot Platforms, Cipher Mining, and CleanSpark reported strong revenue and profitability growth.
Argo Blockchain mined 124 coins in January, 92 in February and 103 coins in March, bringing the quarterly total to 319.
Going by the average Bitcoin price in Q1 of $53,578, it means that the company’s revenue came in at over $17 million, higher than the $16.6 million it made in the same period in 2023. Analysts see its revenue coming in at $18.99 million.
For the year, analysts expect that Argo Blockchain’s revenue will rise by 21% to $61 million. However, doing estimates for Bitcoin mining companies is difficult because revenue is always impacted by the BTC price.
Is Argo Blockchain stock a good buy?
I believe that Argo Blockchain, a company that neared going bankrupt in 2022, is one of the riskiest Bitcoin stock to buy. It has significant debt, which it has worked to reduce in the past few months. Most recently, the company did that by selling its Mirabel facility in a $6.1 million deal.
While this sale was good, it also put the company in a difficult place by reducing its mining capacity at a time when halving has boosted mining difficulty.
The other challenge is that Argo Blockchain is still highly indebted even after reducing its debt in the past few years. It has over $55.2 million in debt, down from $60.6 million last November.
These debts are its senior notes of $40 million, Galaxy Digital’s $14 million, and the Baie Caomeau mortgage of $1.2 million. Galaxy’s debt came from a $100 million rescue package that the company received to avert bankruptcy.
As such, with Argo Blockchain, we have a highly leveraged company that is mining just a few coins per month. Its debt makes it difficult to expand its mining operations to boost its scale.
Argo Blockchain share price forecast
The ARBK stock price has moved sideways in the past few weeks. It has remained at $1.40 recently, a few points above the crucial support level at $1.29, its lowest swing this year. It is also consolidating at the 50-day and 25-day Exponential Moving Averages (EMA).
Most notably, the stock has formed a falling wedge pattern that is nearing its confluence level. That means that the stock could soon have a bullish breakout, especially if Bitcoin continues rising. If this happens, the next point to watch will be at $1.60. However, a drop below the support at $1.30 will point to more downside.
Credit: Source link