Will the Argo Blockchain share price recover?

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

The chart is not pretty – not only has the price fallen recently, it has been on a downtrend for much of the 12 months.

So, will the price slide even lower, or could it start to regain ground? As an Argo Blockchain shareholder myself, this is not just a theoretical question. I have to decide whether to sell at a loss or keep hoping for an improvement in the share price.

Changed times

Argo was riding high for parts of last year, when crypto prices were more robust and the broader economy seemed less fragile than it does now.

But the US dollar value of Bitcoin has fallen 69% last year (the pound value has fallen 61%). Many technology-related stocks experienced sharp price falls in the last months of 2021 and have yet to recover their old levels.

That matters 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 ilk mean less profit for Argo – or none at all.

Business challenges ahead

That environment is reflected in some of the challenges the company faces.

This month they announced plans to sell thousands of unused mining machines and raise capital by issuing new shares. It will dilute existing shareholders. I see a risk that in order to increase liquidity further in the future, the shareholders may be watered out again.

Part of the rationale for this move was to “e.gensure that the company has the working capital necessary to. . . fulfill its obligations during the next twelve months.” Although the company is working to stay viable, the language used seems ominous to me. Apparently, the board is concerned that some tough drugs are needed just to meet the company’s short-term obligations.

Reason for optimism

But all is not lost.

The company has proven that it can profit from mining. It can be the basis of future profits. Just as a fall in crypto prices has hurt the Argo Blockchain share price, any future rise could help it.

The story continues

Argo also has a number of data centers that I think can be used to make money even if it’s not by mining crypto. Demand for data center space remains high, and I expect that to continue.

Where next for the Argo Blockchain share price?

Despite that, the company clearly faces challenges. The latest moves are cautious, but strengthening the balance sheet in that way could further damage investor sentiment. In fact, since the announcement, the Argo Blockchain share price has been moving downwards.

With positive news and higher crypto prices, the price may recover in the future. But I think there is a real risk that it could end up going to zero. Even if it does, I don’t expect it to happen anytime soon.

For now, I still have my shares. However, if the outlook does not improve in the coming months, I will consider selling them.

The post Will Argo Blockchain Share Price Recover? appeared first on The Motley Fool UK.

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C Ruane holds positions in Argo Blockchain. The Motley Fool UK has no position in any of the stocks mentioned. Views on the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we provide in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

The content of this article is provided for informational purposes only. It is not intended to be, nor does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which have several risks, including total loss of invested money. Readers are responsible for performing their own due diligence and for obtaining professional advice before making investment decisions.

Motley Fool UK 2022