The downtrend of Canaan Inc. (CAN) shares amid broader cryptocurrency volatility
Canaan, Inc. (CAN) stock price was down 12.21% at market close on May 10e 2021, bringing the price per share down to $ 10.21. Subsequent fluctuations before market launch caused the price to drop 6.46% to $ 9.55.
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Cryptocurrency issues
April 2021 saw a significant downtrend in the cryptocurrency sector, with related stocks being hit as well. Despite the very promising launch of a new line of facial recognition chips and the signing of additional hardware installation agreements, CAN suffered. While the surge in Bitcoin prices directly drives a boom in Bitcoin mining companies, the reverse is also true. As Bitcoin prices stabilize, operating costs remain constant, making Bitcoin mining a very capital intensive business with many inherent risks.
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Financial reports
CAN’s most recent unaudited financial report contained a pre-market press release released on April 12.e, 2021. In the fourth quarter of 2020, $ 5.9 million in revenue was generated, with annual revenue of $ 68.6 million in 2020. Fourth quarter 2020 numbers were down 93% from in 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 perform better than their competitors. Canaan claims to have pioneered the first ASIC-powered Bitcoin mining technology as early as 2013, in which case it initially helped advance the growth of the Bitcoin mining sector that has taken the world by storm since.
Hip tied with Bitcoin
The company reports that it is currently the second largest producer of Bitcoin mining machines in the world. It follows that the prices of CAN shares tend to fluctuate with the price of Bitcoin. While CAN stocks can be a promising addition to investing in Bitcoin, it is not the only value they have.
Scope of Bitcoin mining for CAN
With the less-than-stellar numbers reported for 2020, 2021 looks more promising, with CAN having received orders for 100,000 of its Bitcoin mining products. This translates directly into a much more encouraging revenue outlook for the invested parties, seeing how CAN will operate at full capacity for the remainder of the year to fulfill its orders. Despite the inherent volatility, CAN expects first quarter 2021 revenue of more than $ 61 million, more than its overall profit for 2020.
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Future prospects for CAN
Despite a troubling 2020, the company has high hopes for the remainder of 2021 as regulations and restrictions resulting from the global pandemic are relaxed. Current and potential investors hope for significant and lasting increases in shareholder value.