Shares of MARA Holdings (NASDAQ:MARA) declined 3.0% to $13.585 in late-morning trading on Thursday, despite a new bullish analyst initiation that highlighted the bitcoin miner's pivot toward artificial intelligence and high-performance computing infrastructure. The drop came as investors weighed the approval of a significant increase in the company's equity incentive plan, raising fresh concerns about dilution.
The stock opened at $14.41 and briefly touched an intraday high of $14.71 before reversing course. The selloff appeared isolated to mining stocks, as the broader tech sector held steady. The Invesco QQQ Trust (NASDAQ:QQQ), which tracks the Nasdaq 100, rose 0.5%, while bitcoin slipped 1.3% to $59,438. Other miners also struggled: Riot Platforms (NASDAQ:RIOT) fell 2.6%, CleanSpark (NASDAQ:CLSK) dropped 3.3%, Cipher Mining (NASDAQ:CIFR) lost 4.3%, and IREN Ltd. (NASDAQ:IREN) declined 3.2%.
Bullish Analyst Call
Citizens analyst Greg Miller initiated coverage of MARA with a Market Outperform rating and a $24 price target, representing potential upside of approximately 77% from Thursday's closing level. Miller pointed to growing demand for powered capacity as miners repurpose their energy infrastructure from bitcoin mining to high-performance computing for large enterprise clients. This shift is part of a broader trend where crypto miners leverage their access to low-cost power and data center expertise to tap into the booming AI market.
Dilution Concerns Weigh
However, the positive sentiment was tempered by news that MARA shareholders had approved an 18 million share increase to the company's 2018 equity incentive plan. According to an 8-K filing, this represents about 4.7% of the 381.27 million shares outstanding as of April 30. The plan had only 5.26 million shares available for future issuance as of March 31, so the new authorization boosts the pool to approximately 23.3 million shares, or about 6.1% of the current share count, before any future grants or usage.
The shareholder vote saw 83.7 million votes in favor of the equity plan amendment, 26.4 million against, and 102.8 million broker non-votes. Separately, the say-on-pay proposal received 65.0 million votes for and 45.0 million against, representing about 59% of yes-no votes in support.
Financial Performance and Bitcoin Exposure
MARA's stock-based compensation reached $31.9 million in the first quarter, equivalent to about 18% of its revenue. The vast majority of that—$29.2 million—was recorded under general and administrative expenses, making up roughly one-third of G&A. The company reported a net loss of $1.26 billion for the quarter, driven largely by a $1.0 billion hit from fair-value swings in its bitcoin holdings and related receivables.
As of March 31, MARA held 35,303 bitcoins with a stated fair value of $2.41 billion, based on a price of $68,222 per coin. At Thursday's bitcoin price of $59,438, the same holdings would be worth approximately $2.10 billion, representing a decline of around $310 million. This calculation does not account for any changes in MARA's current bitcoin holdings.
Strategic Shift Toward AI
MARA is actively working to reposition its stock story away from its dependence on bitcoin price fluctuations. In April, the company announced plans to acquire Long Ridge Energy & Power for approximately $1.5 billion, including debt. The deal includes a natural gas plant in Ohio and more than 1,600 acres of land earmarked for a data center campus. CEO Fred Thiel told Reuters that the location has all the key components needed to execute that plan, signaling a significant pivot toward AI and cloud computing infrastructure.
Despite the near-term headwinds from dilution and bitcoin volatility, the company's strategic shift could provide a more stable growth trajectory if it successfully transitions into a high-performance computing provider. However, investors remain cautious as they assess the balance between the promising AI opportunity and the ongoing risks associated with the company's core crypto mining business.
