Canaan (CAN) 2020 Q4 Financial Performance Preview

Canaan Inc (NASDAQ:CAN), founded in 2013, specializes in manufacturing hardware for mining bitcoin. It is one of the world’s biggest producers of bitcoin mining machines in terms of computing capabilities. The company went public in November 2019 by pricing its shares at $9 for total proceeds of $90 million.

The Hangzhou, China-based company performed well in terms of stock price gains so far this year. Bitcoin value rose substantially over the past year and so does the demand for Canaan’s Bitcoin mining machines. As a result, Canaan stock jumped nearly 160 percent on a year-to-date basis.

Meanwhile, Canaan recently announced its financial results for the fourth quarter. The company reported a loss of 72 million yuan for the three months ended December 31, narrower than the loss of 86.4 million yuan in the comparable period of 2019. On an adjusted basis, net loss came in at 73.1 million yuan, lower than the loss of 84.8 million yuan in the year-ago quarter.

Revenue declined 82 percent on a year-over-year basis to 38.2 million yuan. The drop was mainly attributed to lower sales of total computing power. Moreover, Canaan could not capitalize on the rising demand for its mining machines in the fourth quarter due to insufficient inventory.

Commenting on results, CEO Tong He said in a statement, “Due to supply chain disruptions, as the price of Bitcoin rallied in late 2020, we experienced a surge of demand for high-quality mining machines both in and outside of China. By leveraging our established market presence, we further optimized our international customer base, secured a large number of pre-orders from clients in both domestic and international markets, and streamlined our supply chain management to optimize our cash flow.”

Looking forward, Canaan expects its revenue to improve substantially in 2021. For the first quarter, the company projected revenue of at least 400 million yuan.

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