January 28, 2021

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This Bitcoin Mining Company's Stock Price Just Dropped 13%

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This Bitcoin Mining Company's Stock Price Just Dropped 13%

This time last year, Canaan, which makes Bitcoin mining hardware, was basking in the afterglow of a successful $90 million IPO in the US. It became the first cryptocurrency company to be listed on the Nasdaq stock exchange.

This year has been quite a bit tougher for the integrated circuit manufacturer—despite Bitcoin’s price gains. The price of its stock tumbled to $5.00, down over 13% from yesterday’s close, after its third quarter earnings report.

Canaan price chart for 2020
Canaan’s price has been up and down this year. Image: TradingView

Things were looking mostly bright for Canaan until March. That’s when the Chinese company, which is based in the Cayman Islands, was hit by a class action lawsuit in the US. Stockholders accused it of security law violations. It’s also when the COVID-19 pandemic swept the globe.

Between May 27 and November 13, Canaan’s stock price didn’t approach $3.00.

After a strong November and ahead of today’s quarterly earnings report, hopes were high that the integrated circuit manufacturer was due for better days. That faded a bit as the company reported a 76% decline in year-over-year revenue and a loss for the quarter.

Canaan’s Chief Financial Officer, Quanfu Hong, found a silver lining. After pointing out that the COVID-19 pandemic had depressed production capacity, he said, “However, the demand for mining machines in the market continued to rebound during the third quarter, and we have received a large number of pre-sale orders which are scheduled for delivery starting in the fourth quarter of 2020.”

During the third quarter of 2020, which ran from July 1 to September 30, Bitcoin went from a starting price of $9,225 to $10,791, an increase of 17%. So far during the fourth quarter it’s been on a tear, hitting an all-time high today, November 30.

Canaan hopes that what’s good for Bitcoin is good for its business.

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