Argo Blockchain stock was just made available on Robinhood IPO Access. That means retail investors have a chance to pick up the stock before the IPO is launched.
All a Robinhood user needs to do is express interest in the IPO stock and then be randomly selected to hold one of the set-aside IPO shares.
We’ve seen a few big winners come from Robinhood IPO Access.
Duolingo Inc. (NASDAQ: DUOL) is up to $174 from its $102 price, a 70% return for early investors.
FIGS Inc. (NYSE: FIGS) is up to $42 from a $22 IPO price, a whopping 90% gain.
But not every IPO stock is winner. Some can lose half their value from the jump if there’s too much early hype.
Here’s where Argo falls…
Why Argo Stock Could Be Different
Argo already trades on the London exchange under the ticker ARBKF. People interested in over-the-counter trading can pick up some shares of the company.
What’s changing is the company will now trade on the NASDAQ, making it easier for American investors to access its stock. U.S. traders can buy shares in the form of American Depository Receipts (ADRs) – these can represent one share or a bundle of shares.
Alibaba Group Holding Ltd. (NYSE: BABA) is another company that offers ADRs.
The Argo Blockchain IPO will be 7.5 million ADRs, and one ADR will represent 10 shares of Argo stock.
Argo said this week it expects an IPO price of $18.40. That does not sound too high compared to other IPOs on Robinhood we’ve seen this year. All except Robinhood Inc. (NASDAQ: HOOD) and Duolingo have traded in a range of $15-$30.
Of course, similar price tags don’t necessarily speak to the real value of the company. But the fact that we can already observe Argo Blockchain stock prices over the counter helps the case. The company based its IPO estimate on the Sept. 10 London exchange price of $1.84 per share.
The final IPO price is yet to be determined, however.
Argo said each ADS would represent 10 of its ordinary shares. And that will ultimately determine whether you should get in on this stock early or not.
What Is Argo Blockchain?
Argo is blockchain technology company focused on large-scale cryptocurrency mining.
Anyone can mine Bitcoin or the equivalent with another cryptocurrency. Individuals do it, but they don’t have the resources that entire companies like Argo Blockchain do.
Mining crypto requires a lot of power. You need more than the entire nation of Argentina.
It’s the difference between a team of jackhammers versus the lone mountaineer sticking his hat in a river to catch gold.
A small team might produce a handful of Bitcoin in a year. Companies like Argo Blockchain can produce hundreds or thousands – or millions of USD.
The faster a company can mine crypto, the more profitable it will be. Right now, the average time to mine crypto is about 10 minutes. But Argo wants to beat that.
Argo Blockchain’s Speedy Growth
Argo is currently expanding its operations, near doubling the company’s mining capacity over the last year.
Unfortunately, the number of Bitcoin it mined in the same period cut in half, from about 1,600 to about 800. This will happen in the crypto world. Every time Bitcoin experiences a “halving,” which occurs about every four years, the coin becomes harder to mine.
The Chinese government added some stress to the company when it started cracking down on Bitcoin mining.
Nonetheless, the company’s own Bitcoin stash jumped 898%, from 127 to 1,268 bitcoins over the year. It wants to continue growing until it leads the market in quality and efficiency. For example, it prioritizes state-of-the art data centers for mining North America – it’s not looking to set up a pop-up mining operation.
Its selection depends on the cost of hydropower and the machines available.
Cheaper hydropower and efficient machines translate to cleaner crypto mining – a key mission of Argo Blockchain, environmental sustainability.
It also translates to profits for successful miners…
Is Argo Blockchain Profitable?
Argo fortunately stays profitable, even when the Bitcoin pickings are slim.
In fact, its margin was about 78% for the month of June. And for the first half of the year, Argo Blockchain’s profits rose 2,000% – it went from over $687,000 to over $13 million.
This was due to crypto prices rising. Bitcoin just about doubled in 2021, and other cryptocurrencies, like Ethereum, followed.
It can also be attributed to Argo’s growing pool mining resources at the same time.
Revenue went from $15 million to $42 million a 180% increase.
Now, this is clearly a strong play on the crypto industry. But the question is whether you should buy early from Robinhood or wait it out…
Should You Buy Argo Blockchain Stock?
Any time retail investors get a chance to buy an IPO stock is a rare opportunity.
This opportunity is a little rarer in that you can see how the stock has performed on the London Stock Exchange before buying. You get a slightly better financial picture than you would going in blindly to an IPO.
And what do we know?
Argo Blockchain’s growth is accelerating quickly. And it is already profitable. And its growth puts it in position to lead the crypto mining space.
Of course, it might be too early to tell which blockchain mining company takes the cake. It’s easy to get excited about this market – and it’s easy to get over-excited.
The entire business model depends on the adoption of crypto. Then, it depends on how much of it the company can mine. And that depends on if it can do so with minimal energy cost.
Basically, if you buy this stock, you are buying on the hope of short-term pop that happens at the start of many IPOs.
Best-case scenario, Bitcoin becomes officially accepted legal tender around the world.
That would make it a long-term hold. If you’re a crypto bull, buying this stock early would be consistent with your belief.
Still, IPOs can imply a huge, irrational bounce in a stock price – meaning, if you buy too soon, you risk losing some of your investment in the early weeks.
Look closely at how Argo has moved on the London exchange and compare it with U.S. demand to get a good idea of where it will go.
Now, IPOs always carry a level of uncertainty. But this tech stock has proven itself already…
One Stock to Buy Instead of Argo Blockchain
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About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.