Many eyes are on cryptocurrencies’ rises and fall as their popularity grows. Cryptocurrencies are more volatile than stocks, but that’s not necessarily a bad thing. Given that the crypto market is newer, massive price swings have become a feature of the asset.
For investors who want exposure to digital currencies without, or in addition to, directly investing in coins, one avenue is buying stocks that are either financially tied to crypto-assets, support making the blockchain network more efficient, or operate in the crypto market in some capacity. Here are some stocks that are making waves in the crypto world.
Coinbase
Even with robust growth in terms of revenue and EBITDA, COIN stock has been trending lower. This does not come as a surprise with the cryptocurrency market remaining jittery. However, the long-term outlook for Coinbase is bright. With the wider adoption of cryptocurrencies, the company stands to benefit.
First, Coinbase has expanded in Japan and has also been recruiting in India. International expansion is a key factor that can help in sustaining the growth momentum. Data suggests that the number of crypto users can increase to one billion by the end of the year. As of December 2021, the number of crypto holders was 295 million. Therefore, the addressable market is getting bigger and Coinbase is positioned to benefit.
Furthermore, institutional adoption of crypto has been increasing at a healthy pace. For the third quarter of 2021, Coinbase reported an institutional trading volume of $234 billion as compared to $27 billion in Q3 2020. The company has also recently partnered with One River to offer crypto accounts for wealth managers.
It’s also worth noting that Coinbase has been aggressively increasing the number of assets traded on the platform. In turn, this is another catalyst for active user growth. So with healthy revenue and cash flow growth, COIN stock looks attractive. Moreover, the company has a robust cash buffer to pursue aggressive expansion efforts.
Block (SQ)
SQ stock is another name that has been in a deep correction mode. In the last six months, the stock has declined by almost 60%. I believe that gradual accumulation can be considered. Recently, Bank of America Securities analyst Jason Kupferberg upgraded SQ stock to “buy” from “neutral,” and believes that the selloff is overdone.
For Q3 2021, the company’s Cash App generated $1.82 billion in Bitcoin revenue and $42 million in bitcoin gross profit. Among other plans, Block will also be launching a decentralized Bitcoin exchange.
Moreover, in January 2022, Block founder and CEO Jack Dorsey confirmed that the company is building an open Bitcoin mining system. In turn, the idea is to make Bitcoin mining easier and reduce the consumption of energy.
It’s worth noting that Cash App has been a game-changer for Block and can deliver robust cash flows in the coming years. With that, the company will likely deploy more investments towards the cryptocurrency segment. As use cases emerge, Block is likely to have ample growth opportunities.
Marathon Digital Holdings, Inc.
DA Davidson analyst Christopher Brendler recently maintained a Buy rating on Marathon Digital Holdings, Inc. (NASDAQ: MARA) stock with a price target of $65, identifying the firm as the “Top Pick” among cryptocurrency miners for 2022 in a bullish investor note.
The analyst highlighted huge wins for Marathon Digital Holdings, Inc. (NASDAQ: MARA) in 2021 that included a new rig order from industry leader Bitmain.
Hedge funds also favor Marathon Digital Holdings, Inc. (NASDAQ: MARA) as a crypto mining play. 12 hedge funds in the database of Insider Monkey were long Marathon Digital Holdings, Inc. (NASDAQ: MARA) at the end of September with stakes worth $46 million.
Riot Blockchain
RIOT stock has also been in a correction mode with a downside of 45% in the last six months. Similar to Marathon, the company has a rapid miner deployment plan through 2022. This is likely to translate into healthy revenue growth.
For January 2022, Riot reported hashing capacity of 3.4EH/s. For the month, the company mined 458 Bitcoins. By the end of the year, Riot expects to increase mining capacity to 12.8EH/s. This would imply almost four-fold growth in mining capacity.
Considering this growth, Riot is likely to mine 1,600 to 1,800 Bitcoin every month from January 2022. At a Bitcoin price of $45,000, it would imply a monthly revenue potential of $72 million to $81 million. The best part of growth is still to come for the company.
It’s also worth noting that for Q3 2021, Riot reported revenue of $64.8 million and an adjusted EBITDA of $37.6 million.
This implies an adjusted EBITDA margin of 58%. As mining capacity increases, the company is positioned to deliver healthy EBITDA and cash flows. This would position Riot Blockchain for further expansion beyond 2022.
Overall, RIOT stock looks attractive with growth likely to accelerate. I would not be surprised if the stock doubles in the next 12 months.
PayPal
PYPL stock has been trending lower in the last few quarters. In the last six months, the stock has corrected by 58%. It’s difficult to predict the bottom. However, PYPL stock trades at a forward price-to-earnings (P/E) ratio of 24.6. Thus, valuations look attractive considering the company’s growth potential.
On the cryptocurrency front, PayPal seems to be bullish. Users can buy, sell and hold crypto using the company’s app. Moreover, hacking and scams concerns have been increasing. In turn, PayPal offers complete replacement of crypto if the account is hacked. Also, users in the U.S. can use crypto to make purchases.
On that note, PayPal has launched a crypto service in the U.K. However, payments are currently not enabled. Nonetheless, PayPal will likely expand its crypto offering to other countries globally. At the same time, the number of supported assets is likely to increase in the coming years.
It was recently reported that PayPal is also working on launching its stable coin. The coin is likely to be backed by the U.S. dollar, and PayPal is working with regulators for a smooth roll-out.
Robinhood
HOOD stock has continued to disappoint investors after listing highs of $85. Currently, the stock trades around $13.50. After the big plunge, though, HOOD stock looks attractive and a good contrarian bet. And I believe that crypto trading can be a possible lifeline for the company.
It’s worth noting that Robinhood has spent the most in terms of crypto lobbying expenditure for 2021. This is an indicator of the importance the company assigns to this business segment.
Robinhood has been expanding on the crypto services to benefit from the segment growth. As an example, the company will be launching crypto wallets in the first quarter of 2022. Additionally, the crypto gifts service is likely to be launched, which will enable users to send crypto to family or friends by sharing a link.
Another growth catalyst for the crypto segment is the company’s expansion beyond the United States. That said, in 2022, a crypto platform for international customers is planned.
It’s worth noting that for Q4 2021, the company’s crypto revenue increased by 304% year-over-year to $48 million. This growth trajectory is likely to sustain considering new features and international expansion.
BIT Mining Limited
BIT Mining Limited has shed non-crypto assets and is trying to make a name for itself in the crypto world in the difficult Chinese market. BIT Mining Limited owns more than two thousand Bitcoin and Ethereum combined. It also holds over 61 million Dogecoin. The firm hopes to produce digital coins worth tens of millions per month this year. For this purpose, BIT Mining Limited has increased a stake in an Ohio-based crypto mining site and bought Bitcoin mining machines worth more than $6 million.
BIT Mining Limited has shielded itself from a crackdown against crypto in the Chinese market by moving operations overseas. The company has business interests in Texas and Kazakhstan as well. 6 hedge funds in the database of Insider Monkey hold stakes worth $32 million in BIT Mining Limited.
Just like Mastercard Incorporated (NYSE: MA), PayPal Holdings, Inc. (NASDAQ: PYPL), Block, Inc. (NYSE: SQ), BIT Mining Limited (NYSE: BTCM) is one of the stocks on the radar of growth investors.
