With its stunning 1 year rise of over 4,400% it may seem a little odd to say that the high-flying Bitcoin mining stock is potentially undervalued on the London market with a m.cap of £1bn, but on a comparables valuation approach it appears that this could be the case.
Listening to Peter Wall earlier in the week stating that Argo is one of the world’s biggest and most efficient miners of Bitcoin (Going for Growth: Argo Blockchain primed to be front and center of the Bitcoin boom), readers may have been forgiven for thinking this was perhaps a bullish statement from a CEO. Except this wasn’t.
The way that the UK values companies in comparison to international peers has long-been a frustration of star fund managers such as Nick Train and despite its £1bn valuation, Argo Blockchain in the UK appears to be trading far short of the valuation placed on its US peers. And perhaps this is further evidenced by it constantly playing catch-up to the gains from its OTCQB Venture Market in the US (and this still lags behind NASDAQ-listed peers).
While Argo releases a monthly update to investors on its performance, the most recent data for a high-level comparable analysis that can be used is that from Q3 among US peers such as Marathon and Riot Blockchain:
|Q3 Revenue||Q3 Rev Growth||Mining Margin||M. Cap|
|Argo Blockchain||£3.63m (USD $5m)||75%||73%||£1bn ($1.44bn)|
|Riot Blockchain||$2.4m||42%||47%||$4.77 bn|
ARB has room to grow: Some of the best revenues, best growth and margins; yet the lowest m.cap by far!
Having a look at the high-level comparable analysis – you will see that Argo Blockchain has the best Q3 revenue, strongest revenue increase in absolute terms (Marathon is from a lower base) and just like Peter Wall said, has one of the best mining margins in the market.
Yet its m.cap in the UK is billions behind its US rivals that are listed on NASDAQ on a USD equivalent basis.
With Argo cranking up the long-term power with its work-in-progress Texas Facility, it is difficult to argue that it is not under-valued as like its rivals it is seeking to increase its mining activities.
However should it keep reporting impressive month-on-month growth and perhaps list on NASDAQ, then it seems highly plausible that its valuation will catch-up to its peers and then some.