Shares of MARA Holdings (MARA 0.59%) -- formerly known as Marathon Digital Holdings -- jumped as much as 19.3% higher on Thursday morning. The move, driven by an analyst-stumping earnings report, subsided to a 9.2% gain by noon, ET. Before celebrating the large price gain, it should be noted that the stock is down by 55% over the last year, including Thursday's boost.
MARA's Q4 results
Your average Wall Street analyst expected a fourth-quarter net loss of approximately $0.16 per share, based on revenue near $181 million. Instead, MARA reported adjusted earnings of $1.24 per share. Top-line revenue rose 37% year over year, landing at $214 million.
The company generated 2,492 Bitcoins (BTC 2.19%) in the fourth quarter at an average cost of $52,035 per coin. MARA also purchased 15,574 Bitcoins on the open market during this period, at an average cost of $98,531 per coin.
How MARA's business works
MARA collects revenue by reporting the fair value of its Bitcoin holdings on the balance sheet, supported by selling data center services and some of the energy it generates. It owns wind farms and hydroelectric generators with 136 megawatts of power-generating capacity.
MARA is highly dependent of Bitcoin prices rising in the long run. Its financials look terrible when Bitcoin prices are trending down, and the next report should reflect February's deep price dip. Last year's halving event reduced the crypto-based rewards for Bitcoin miners, while the production costs stayed relatively flat.
The halving process removes weaker hands from the crypto-production industry, leaving more of the rewards to the leading miners. As a result, MARA's share of the global mining awards rose to 5.6% in the fourth quarter, up from 4.8% in the previous period and 4.4% in the fourth quarter of 2023.
It's a risky business and MARA has wisely widened its business portfolio to include energy and computing services. That could come in handy when the next crypto winter sweeps in, or Bitcoin prices drop for any other reason. At the same time, MARA took on a ton of long-term debt to finance Bitcoin purchases in the fourth quarter. This stock is not for the faint of heart.
