One of the shares that has generated the most interest over the past six months has been Argo Blockchain (LSE:ARB). I see the shares as a good way to mirror the movements in the growing sector of blockchain technology and general crypto-mania. But given the share price move from 5.35p a year ago to 220p today, have I missed the boat?
Insider stock selling
This is actually a very topical question due to recent developments. On Friday, the share price fell almost 12% to 220p following news that some insiders had been selling stock. More specifically, CEO Peter Wall and chairman Ian Macleod sold around 1.5m shares between them. When insiders sell stock, it doesn’t usually help the share price. After all, if people who know the business well are selling, does this mean the share price is overvalued? Or that those people think the share price won’t head much higher?
This could be the case, but for Argo Blockchain shares specifically, I don’t think it’s a cause for concern. Firstly, Wall sold the bulk of the shares (1.4m) back in December with an average sale price of 29p. The share price is significantly higher than this now, so I’m not overly worried. Also, a lot has happened since December!
Secondly, insiders sell stock for many reasons. It could be that those involved needed cash for some reason. Or that they felt that their stock portfolio was overly concentrated with those particular shares. So although the Argo Blockchain share price reflected the news with a drop, I’m personally not too worried about this news. In fact, I think it represents a dip that’s worth buying.
Long-term potential for Argo blockchain shares
It’s important to remember what Argo Blockchain does. It’s a blockchain mining company, generating revenue from the value of the coins it mines. For example, in February the company mined 129 Bitcoins (or other coin equivalents). When we translate that into fiat (real) money value, it came in at around £4.34m in revenue. This was a record month for the business, following up on a strong January.
Although Bitcoin itself will become harder to mine as the supply is technically capped, other coins can be mined that have plentiful supply. With the growing value of a lot of these other coins (known as altcoins), I think Argo Blockchain shares have a lot of potential to move higher. In a similar way to a gold miner being more profitable if the gold price rises, Argo will be more profitable if Bitcoin and altcoins rise in value.
The risk to my view is that the sector could be more speculation than actual value. It’s no surprise that in this low-interest-rate world we live in, a lot of cash is trying to find a home. So the price of the coins could be overinflated. If this is the case and the bubble burst, Argo Blockchain shares would likely take a tumble. For me, it’s a risk I’m happy to take, and so would look to buy Argo Blockchain shares on this recent dip.
Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…
You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.
And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.
Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.
But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!
jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make 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.