To The Moon

Larry Ramer

Marathon Digital ($Marathon Digital Holdings Inc(MARA)$ )

Marathon Digital (NASDAQ:MARA)focuses on miningBitcoin. In addition to being badly hurt by the falling price of Bitcoin, the company’s second-quarter results were negatively impacted by rising electricity prices and higher energy costs. Unfortunately, rising costs and falling revenue are not a formula for success for any company.

With theFederal Reserve continuing to tightenmonetary policy, Bitcoin’s value is likely to remain depressed for some time. Meanwhile, regulators are looking to crack down on cryptos in general and bitcoin mining in particular, creating big risks for Marathon and the owners of MARA stock.

Finally, as of the end of Q2, thecompany had just $86.5million of cash, meaning that it will, likely, relatively soon, either have to take out loans at relatively high interest rates, sell more MARA stock at relatively low prices, sell off limited assets, or declare bankruptcy. Those are some of the top reasons MARA makes the list of IT stocks to sell.

Hut 8 Mining ($Hut 8 Mining Corp(HUT)$ )

At the moment, Hut 8 Mining alsofaces plenty of regulatory risk.That’s partly because Canada reportedly has a “stringent regulatory environment” for cryptocurrencies in general.

In addition, according to Time Magazinecontributor Laura Millan Lombrana, “Bitcoin mining’s climate impactis comparable to farming cattle or burning gasoline when taken as a proportion of market value, according to researchers at the University of New Mexico in Albuquerque.”

On the financial front, Hut 8’sresults are deteriorating. In its second quarter, the company’s revenue jumped to $43.8 million from $33.5 million, year over year. However, it generated a gross profit of negative $3.8 million, as compared to a profit of $16.97 million in Q2 of 2021. On the balance sheet, Hut 8 had $60.1 million in cash and equivalents at the end of last quarter, down from $140 million in Q2 of 2021. Like MARA, HUT is another top IT stock to sell.

DocuSign ($Docusign(DOCU)$ )

Morgan Stanley analyst Josh Baer warned that, “intensifying competition and commoditization of the company’s core digital signature capabilities” would negatively impact DOCU, leading to “pricing pressures,”as reported by Barron’s.  The analyst also noted that DOCU is encountering “demand normalization” in the wake of the pandemic.

“Further out, he sees intensifying competition and commoditization of the company’s core digital signature capabilities, leading to pricing pressure,” notes Barron’scontributor Eric J. Savitz.

In addition, DocuSignreported an operating loss of$39 million for last quarter, much worse than its operating loss of $18.7 million during the same period a year earlier.

Although DOCU’s cash and equivalents last quarter came in at $637.2 million, up from $518.6 million during the same period a year earlier, it has $854.6 million of debt. Additionally, it relies a great deal on stock-based compensation to pay its employees, shelling out$141.2 million of DOCU stockfor compensation purposes last quarter.