The roller-coaster Argo Blockchain (LSE: ARB) shares have been on makes the ‘Big One’ at Blackpool Pleasure Beach look insignificant.
In 2021, the share value peaked at 340p. As I write on 29 August, it’s down to eight.9p. That’s a painful 97% collapse. And the Bitcoin (BTC) miner that was pushing a billion kilos is valued at only a fraction over £50m, on the time of writing.
The BTC value has fallen over the identical timescale, however by nowhere close to as a lot. It appears to be staying round $20,000 per coin. So may Argo Blockchain be the penny inventory purchase of 2023?
First half
Argo has simply launched first-half outcomes, and the share value has been up and down a few % because of this.
One factor strikes me above all else when trying on the headline updates. This is an organization that was as soon as anticipated to generate hugh money flows. But now it’s extra prefer it’s beneath monetary stress and trying to survive.
The half noticed income of $24m. That’s after the agency mined 947 Bitcoin and Bitcoin equal, up 1%. As the update stated that was “regardless of a 78% improve within the international hashrate from 30 June 2022 to 30 June 2023“.
Revenue was 31% decrease than the primary half of 2022, and led to a internet lack of $18.8m.
Too low cost now?
The massive query for me now could be whether or not Argo Blockchain shares are oversold and an excellent purchase. I had lengthy thought-about the inventory as severely overpriced, however now I do marvel if this may be an excellent penny inventory alternative.
Argo lower its non-mining prices by 21% within the second quarter and reached the top of June with $9.1m money on the books. There was additionally 46 BTC. And on the latest value, that must be price round $1m.
Since that date in July, Argo raised $7.5m from a share placement. A couple of years in the past, the concept Argo may want such assist would in all probability have frightened shareholders. Right now although, I believe it may need laid the grounds for a worthwhile turnaround.
Earnings and debt
But right here’s my drawback. Current forecasts don’t present any earnings for the subsequent couple of years. There are constructive EBITDA figures on the playing cards. But the anticipated backside line remains to be unfavorable for each earnings and money circulation.
Debt is a part of the issue. At 30 June, internet debt stood at $75m. That’s rather a lot, nevertheless it’s down $68m from June 2022. And it’s really dropped a little bit extra since then, to $72m, as some was repaid from the share placement proceeds.
The content material on this article is supplied for data functions solely. It is just not supposed to be, neither does it represent, any type of funding recommendation. Bitcoin and different cryptocurrencies are extremely speculative and risky belongings, which carry a number of dangers, together with the full lack of any monies invested. Readers are accountable for finishing up their very own due diligence and for acquiring skilled recommendation earlier than making any funding choices.
Please be aware that tax therapy is determined by the person circumstances of every consumer and could also be topic to alter in future. The content material on this article is supplied for data functions solely. It is just not supposed to be, neither does it represent, any type of tax recommendation. Readers are accountable for finishing up their very own due diligence and for acquiring skilled recommendation earlier than making any funding choices.
To purchase, or not?
If debt continues to fall and income ticks upwards as forecasts recommend, I believe there’s an excellent probability Argo Blockchain shares may become an excellent purchase now.
But then again, it’s all depending on the BTC value. That might be a profitable wager. But I gained’t be playing on it.
The publish Are Argo Blockchain shares today’s best penny stock buy? appeared first on The Motley Fool UK.
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Alan Oscroft has no place in any of the shares talked about. The Motley Fool UK has no place in any of the shares talked about. Views expressed on the businesses talked about on this article are these of the author and due to this fact might differ from the official suggestions we make in our subscription providers akin to Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we imagine that contemplating a various vary of insights makes us better investors.
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