HomeEquities ScoreCanaan Inc. (CAN) Stock Trending Down Amid Broader Cryptocurrency Volatility

Canaan Inc. (CAN) Stock Trending Down Amid Broader Cryptocurrency Volatility

Canaan, Inc. (CAN) stock prices were down 12.21% as of the market closing on May 10th 2021, bringing the price per share down to USD$10.21. Subsequent pre-market fluctuations saw the price fall another 6.46%, down to USD$9.55.

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Cryptocurrency Woes

April 2021 saw a significant downtrend in the cryptocurrency sector, with related stocks also taking a hit. Despite the highly promising launch of a new line of facial recognition chips as well as the signing of additional hardware installation deals, CAN has been suffering. While booming Bitcoin prices directly result in a boom in bitcoin mining companies, the inverse is also true. While Bitcoin prices settle, operating costs stay constant, which makes bitcoin mining a very capital-intensive venture with plenty of inherent risks.

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Financial Reports

The most recent release of CAN’s unaudited financial report had a pre-market press release that was issued on April 12th, 2021. Q4 of 2020 saw USD$5.9 million in revenue being generated, with a yearly 2020 revenue of USD$68.6 million. The Q4 2020 numbers were down by a staggering 93% compared to the same fiscal quarter of the previous year.

Frontrunner in Bitcoin Mining

Based in China, CAN develops and manufactures Bitcoin mining machines, claiming that their superior supercomputing solutions are more cost-effective and offer better performance than those of competitors. Canaan claims to have pioneered the first ASIC-powered Bitcoin mining technology as far back as 2013, in which case it would have helped initially advance the growth of the Bitcoin mining sector that has taken the world by storm since.

Tied at the Hip with Bitcoin

The company reports that it is currently the second largest producer of Bitcoin mining machines in the world. It follows that CAN stock prices have a tendency to fluctuate with the price of Bitcoin. While CAN stocks could be a promising supplement to investments in Bitcoin, that is not the only value they have.

Bitcoin Mining Scope for CAN

With the less-than-stellar numbers reported for 2020, 2021 looks more promising with CAN having received orders for 100,000 of their Bitcoin mining products. This translates directly into a much more encouraging revenue outlook for invested parties, seeing how CAN will be running at capacity for the remainder of the year to meet its orders. Despite the inherent volatility, CAN expects a Q1 2021 revenue of over USD$61 million, which is more than their entire earnings for 2020.

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Future Outlook for CAN

Despite a troubling 2020, the company has high hopes for the rest of 2021 as regulations and restrictions resulting from the global pandemic are relaxed. Current and potential investors are hopeful for significant and sustained increases in shareholder value.

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