Will Argo Blockchain Share Price Recover?

Will Argo Blockchain Share Price Recover?

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It was a rotten time to own shares in Argo Blockchain (LSE: ARB). The Argo Blockchain share price has fallen by 88% in the past year. It is now traded as a penny share.

The chart is not pretty – not only has the price been down recently, but has been in a downtrend for most of the 12 months.

So, will the price drift lower or could it start to regain strength? As an Argo Blockchain contributor, this is not just a theoretical question. I need to decide whether to sell at a loss or hold in the hope of an improvement in the stock price.

changing times

Argo has been rising for parts of last year, when cryptocurrency prices were more robust and the broader economy looked less fragile than it does now.

But the value of bitcoin in US dollars has fallen by 69% last year (sterling is down 61%). A lot of tech-related stocks have seen big price drops in the final months of 2021 and haven’t yet recovered from their old levels.

This is important to Argo because optimism about technology and a strong crypto price helped support its share price. As a crypto miner, lower prices for Bitcoin and its peers equate to lower profits for Argo – or nothing at all.

Future business challenges

This environment is reflected in some of the challenges the company is currently facing.

This month, it announced plans to sell thousands of unused miners and raise capital by issuing new shares. This will dilute the existing shareholders. I see a risk that in order to boost liquidity further in the future, shareholders can be diluted again.

Part of the justification for this move was “eEnsure that the company has the necessary working capital. . . It fulfills its obligations over the next twelve months. “Although the company is working to survive, the language used seems ominous to me. The board of directors appears to be concerned that some harsh medication is needed just to meet the company’s short-term obligations.

Reasons for optimism

However, all is not lost.

The company has proven its ability to make a profit from mining. This could be the basis for future earnings. Just as the drop in cryptocurrency prices has hurt the Argo Blockchain stock price, any future increase may help.

Argo also has a number of data centers which I believe can be used to earn revenue even if not by mining cryptocurrency. The demand for data center space remains high and I expect that to continue.

Where’s next for Argo Blockchain’s share price?

Despite this, the company clearly faces challenges. His recent moves are wise but supporting the balance sheet in this way may hurt investor sentiment even more. In fact, since the announcement, the Argo Blockchain share price has fallen to the bottom.

With positive news and cryptocurrency prices rising, the price could recover in the future. But I think there is a real risk that it could end up being zero. Even if she recovers, I don’t expect that to happen any time soon.

Until now I still own my shares. But if the outlook does not improve in the coming months, I will consider selling it.

the post Will Argo Blockchain Share Price Recover? first appeared UK Motley Bean.

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J Roan He has positions in Argo Blockchain. Motley Fool UK has no position in any of the stocks mentioned. The opinions expressed about the companies mentioned in this article are those of the author, and therefore may differ from the official recommendations we provide on our subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, we believe that thinking about a variety of ideas makes us talk We are the best investors.

The content in this article is provided for informational purposes only. It is not intended to be, and does not constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry many risks, including the total loss of any invested funds. Readers are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.

Motley Fool UK 2022

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