Marathon Patent Group, Inc.

Marathon Patent Group, Inc. (NASDAQ: MARA) is a digital asset technology company which mines cryptocurrencies and focuses on the blockchain ecosystem and the generation of digital assets.

Key Updates:

• Recently, the company reported the purchase 70,000 S-19 ASIC miners from Bitmain for USD 170 million. With the above acquisition and along with full deployment of all the capabilities, the company would have 103,000 miners, producing 10.36 EH/s.  
• The group reported the completion of its previously announced USD 200 million shelf offering by utilizing its at-the-market (ATM) facility. The management highlighted that it would utilize the funds to pay for the miners it has purchased from Bitmain and to use for other business developments.
• The company has reported strong growth in the topline and expects the momentum to continue in the foreseeable future, combined with strong growth in the gross profit.

Source: Company Presentation

Q3FY20 Financial Highlights:

• MARA announced its quarterly results, wherein the company posted solid revenue USD 835,184 as compared to USD 321,716 in the previous corresponding period (pcp).
• Operating loss stood USD 1,994,197, higher than the loss of USD 807,859 in Q3FY19. The increase in the loss was due to higher cost of revenue (USD 1,636,046 versus USD 478,811 in pcp), increase in compensation and related taxes (USD 614,604 versus USD 409,609 in pcp).
• The corporation reported net loss USD 1,994,417, higher than USD 754,407.
• The group reported cash and cash equivalents USD 17,252,110, while total assets stood at USD 37,528,664.

Source: Company Reports

Risks: The business model of MARA depends upon price volatility of bitcoins, risk of supply constraints etc. which might dampen the future prospects of the business. Moreover, an increase in the operating costs would weigh on the company’s margins.

Valuation Methodology (Illustrative): EV to Sales based

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendations:

The company is building the largest self-mining operation in North America at one of the lowest energy costs. The company has potential to grow monthly revenue from USD 500,000 to USD 11,700,000 by Q4FY21. Moreover, the company has an exclusive partnership with low energy cost and has consistent access to miners which would lower the company’s production costs along with a decline in energy costs. The company invested more than USD 72 million since, May 1, 2020, which includes USD 52 million in most advanced, state-of-the-art BTC miners, while the company is also planning to invest USD 19 million buildouts for Hardin, MT data center, looks impressive. The company has no long-term debt in its balance sheet, which would provide higher financial flexibility as well. We have valued the stock using EV to EBITDA based relative valuation method and have arrived at a double-digit downside (in percentage terms). For the said purposes, we have considered peers like Aikido Pharma Inc, Acacia Research Corp and Stericycle Inc. Hence, considering the aforementioned facts, we recommend an ‘Expensive’ rating on the stock at the closing price of USD 23.36 as on January 11, 2021.

MARA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

ArcLight Clean Transition Corp.

ArcLight Clean Transition Corp. (NASDAQ: ACTC) is a blank check company focused on opportunities created by the accelerating transition toward sustainable use of energy and natural resources.

Key Highlights

• The company has not selected any business combination and have not initiated any substantive discussions, directly or indirectly, with any business combination targets. However, they intend to pursue opportunities created by the accelerating transition toward sustainable energy and natural resources.
• The company recently completed its IPO and got listed on NASDAQ.

Financial overview

Source: Company

• As of September 30, 2020, the Company had not yet commenced operations. From July 28, 2020 (inception), all activity for the period through September 30, 2020, relates to the Company's formation and the initial public offering. Since the initial public offering's closing, the search for a prospective initial Business Combination is on.
• From July 28, 2020 (inception) through September 30, 2020, the Company posted a net loss of USD 63.748, which consisted of general and administrative costs.

Risks associated with investment

The Company is recently incorporated with no operating history and no revenues. The Company’s search for a business combination, and any target business with which they ultimately consummate a business combination, may be materially adversely affected by the recent coronavirus (COVID-19) outbreak and the status of debt and equity markets.

Stock recommendation

The group currently do not have any specific business combination under consideration. Their directors have not considered a target business, nor they had any substantive discussions regarding possible target businesses among themselves. This draws a caution line with the investors. The company is recently incorporated with no operating history and no revenues. Hence, by the time company does not lock in on any target, we prefer to remain on the side-line. Therefore, based on the above stated reasons we recommend the investors to “Avoid” the stock at the closing price of USD 12.19 on January 11, 2021.

Source: Refinitiv (Thomson Reuters)

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