Marathon Digital Holdings Stock Forecast: MARA looks to continue Monday's hemorrhaging

Marathon Digital Holdings (MARA) stock is down more than 6% in Tuesday’s premarket after dropping an eye-popping 27% on Monday. Three factors have contributed to the market’s negative turn against MARA: a Securities & Exchange Commission (SEC) investigation, a $500 million convertible senior note offering and a broad pullback in cryptocurrency prices.

Marathon Digital Holdings (MARA) Stock News: triple whammy of negative news items

On Monday, Marathon’s 10-Q filing with the SEC noted that the regulator had subpoenaed company executives over matters related to its 100MW Hardin, Montana crypto mining center.

“We understand that the SEC may be investigating whether or not there may have been any violations of the federal securities law,” the filing states.

Marathon Digital issued 6 million shares of common stock at the time in order to fund the undertaking.

The same day MARA officers announced their intention to raise $500 million through an offering of senior convertible securities. Investors have the option of purchasing a further $75 million worth of notes, and the notes would mature at the end of 2026. Marathon’s management intends to use the proceeds to purchase more Bitcoin mining equipment and BTC itself.

The notes have the obvious drawback to current equity investors in that they can be converted into new shares, which would dilute current shareholders – always a drag on share price.

The third setback was the tumbling price of Bitcoin, which started Monday as high as $66,000 at certain points but then sold off to $60,000. BTC price is down to $59,000 at the time of writing.

According to Marathon’s third quarter results, the crypto miner mined more than 417 BTC during October, a 23% increase over September’s results. This increased Marathon’s total stash to 7,453 BTC, which at current prices is $445 million.

Marathon Digital Holdings (MARA) Stock Analysis: 

With MARA down over 6% in the premarket on Tuesday, it appears that the demand zone between Monday’s close at $55.40 and $49.46 may hold up. MARA stock’s all-time high just took place a week ago on November 9 when it reached $83.45.

Monday’s move lower pushed MARA shares below both the 9 and 20-day moving averages. The 50-day moving average at $46.55 could supply more support if the current demand zone fails to hold its own. This is only just above the September 3 swing high at $44.97, which gives the area around $45 more significant as a support barrier.

MARA 1-day chart