One more MARA post. Last week they disclosed a shelf offering.
In other words, they are expanding their total shares but putting them on the "shelf". To be sold when they see fit. This could be soon, or it could be after another runup to take advantage of higher prices.
Quote:
a sales agreement prospectus supplement covering the offering, issuance, and sale by us of up to a maximum aggregate offering price of up to $1.5 billion of shares of our common stock that may be issued and sold from time to time pursuant to an at-the-market offering agreement, dated October 24, 2023 (the "Sales Agreement"), with H.C. Wainwright & Co., LLC, as sales agent.
This is extremely common with BTC miners. Their success outside of BTC bull runs require precision execution.
But I guess it depends on how you view BTC. Is it the future of finance and the next global currency standard?And will only go up? Or is susceptible to wild swings, big bulls and big bears. If the former, HODL matters. And miners increasing HODL means more BTC on the balance sheet constantly raising the stock price as BTC gains. If the latter, then you want them selling portions of their HODL at highs, more than they usually would to pay their bills, to pay off debts and increase cash to be in better financial position for the swings down. But if you're the first person, you still shouldn't own MARA. You should own BTC. MARA does nothing for you if BTC is what you say it is. If you're the second person, you trade MARA knowing you will be out when SHTF.
Unfortunately, just about all of the miners do this during bull runs while also expanding their equipment and mining capabilities. They dilute the shareholders as it goes up and crashes even harder when it comes down. You could argue that MARA has paid down a sizeable portion of their debt and are working towards a more responsible business model having learned the lessons of the last downturn. But do you trust companies who have proven to continually dilute you? Do you trust this will be the last time? That's why I say don't own these, trade them.
CLSK is probably the most responsible miner right now as far as running a good company. Saylor and MSTR are in full belief that diluting shareholders now to buy more and more BTC is the way to go. Acting like a highly levered casino. Is he right?
All that said, it doesn't really matter in a BTC bull market. Just don't get stuck holding the bag. If MARA releases these off the shelf slowly, it could take months to absorb them.
The last three dilutions sent the stock down 22% in 2023, 38% in 2022, and 44.5% in 2021. None of them were near highs like this one except 2021, though it ended up not being a high. The 2021 one happened around $27 and we know what happened after it bottom.. $49 within a month. The second after the BTC market had turned down. The dilution marked the top of a bounce and sold down 38% in less than a month. The third was last year after it had barely picked itself up off the $7 floor to $10.72 and the dilution announcement sent it to $8.39. I think the only applicable comparison is 2021. Already it's gotten as low as 27% from the high. 44.5% would be around $18 for a potential bottom.