Marathon Digital
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Marathon Misses on Earnings: Stock Down Over 15%

By:Mike Butler

Marathon Digital reported a loss, despite better-than-expected revenue

  • MARA stock closed at $25.90, down over 15% from the previous closing price.
  • Marathon reported quarterly revenue of $156.77 million, beating estimates of $146.75 million.
  • MARA reported a loss of $0.04 per share, while analysts expected EPS of $0.02.

Marathon Digital Holdings (MARA) reported earnings on Wednesday, Feb. 28 and the stock price tanked after missing earnings per share (EPS) estimates.

Marathon Digital is a bitcoin mining company that's been popular in the crypto trading space recently, as one of the biggest holders of bitcoin. What's interesting about the price action is that Marathon opened the trading day at $29.77 on Feb. 29, only a few points lower than the previous close, but sold off aggressively as the day went on. There was a lot of hype leading into the earnings call, and that was matched with volatile stock price movement.


Implied volatility climbs

As you can see, heightened implied volatility in this popular bitcoin mining stock was matched with realized volatility for the earnings announcement, and Marathon continues to have high implied volatility even after. The stock has cooled off to start March, but the expected stock price move through the next two weeks is +-$5.03—still extremely high for a $26 stock price.


Looking further through 2024, we can see that the expected move through the June options cycle is +-$14.08, just over 50% of the stock's price.

Through the end of the year, MARA stock maintains a current implied volatility of over 100%, which tells us that the market is expecting the stock price to be as volatile as the stock price itself. MARA stock currently has an expected move through 2024 of +-$26.35, which is greater than the stock price itself.

Of course, a stock price cannot go below zero, but it can multiply as we've seen before. We should expect to see Marathon have large stock price moves through the year, given the level of implied volatility we're seeing today.

Bullish and bearish case for Marathon Digital

Marathon's bitcoin holdings will flourish if the crypto currency's prices keep rising.

The big hurdle that Marathon must overcome is the bitcoin halving that should take place in April of this year. That cuts the bitcoin reward for successful mining transactions in half. This means that new coins produced will dramatically reduce, which can put more value on existing coins going forward.

For Marathon's stock price to continue higher in a bullish fashion, I would expect that bitcoin's price will need to continue to climb, and the mining company will have to make bitcoin mining endeavors even more efficient, as the reward for mining will be cut in half soon.

If bitcoin's price falls, or flutters around the current level, we may see MARA stock chop around or move in a bearish manner, as the company is very reliant on bitcoin's price as it stands.

Time will tell us the story for Marathon Digital but expect to see fireworks through the year in the stock's price with such high implied volatility going forward.

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb

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