MARA Holdings Downgraded to Sell by Compass Point Citing Cash Burn

Compass Point downgraded MARA Holdings from neutral to sell, citing unsustainable cash burn. Key points include:

The hash price is below 5.5 cents, indicating declining profitability.
Significant cash burn may lead to shareholder dilution.
Price target reduced from $25 to $9.50, suggesting over 25% downside from the current price of around $13.
Marathon's business model faces pressure from shrinking mining rewards and high energy costs.
The company trades at a premium compared to Bitcoin prices.
Peer companies like Core Scientific and TeraWulf also underperformed amidst cooling AI investor enthusiasm.
HPC sector multiples decreased from 15x to 5x over the past year.
Potential long-term tailwinds include rising demand for AI infrastructure.
MARA is set to report earnings on May 8; stock has dropped 25% this year, while the bitcoin mining ETF WGMI fell 37%.