Canaan Executives Eye $2M Shares Purchase Post Halving

April 23, 2024

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According to a statement recently released, Canaan, a company listed on Nasdaq, announced that two executives from the bitcoin mining rig marker; Nangeng Zhang, the Chairman and CEO, along with James Jin Cheng, the CFO, are planning to jointly purchase at least $2 million worth of the company’s class A ordinary shares represented by American Depositary shares.

They believe that the company is currently undervalued and see great potential following the recent block-reward halving of Bitcoin

Following the fourth halving of the Bitcoin network, Zhang further mentioned that Canaan is making significant progress in the manufacturing of its A14 series mining rigs. He also added that they have been fulfilling previous orders and have received bulk orders from public company customers. In addition, Canaan is currently in the testing phase for the A15 series and actively developing the A16 series.

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Canaan’s Revenue Takes a Dive

Canaan’s most recent annual report showcased a notable transition from profit to loss, as the company experienced a net loss of $414.2 million in 2023, in contrast to a net income of $69.9 million in 2022. Additionally, the report indicated that Canaan’s mining revenue reached $34 million in the past year, showing a slight increase from $32.5 million in 2022.

In 2023, the tech firm experienced a significant decline in total revenues, which includes product and mining revenue. The revenues decreased by 67.5% to $211.5 million, compared to $651.5 million in 2022. Canaan attributed this decline to the decrease in the average selling price of their Bitcoin mining machines per Thash, dropping from $40.8 in 2022 to $8.9 in 2023. The soft demand and price drop in computing power during that year played a major role in this revenue decline.

The significant drop in revenue can affect its financial stability, business operations, and future growth prospects. Canaan will need to evaluate and adjust its strategies to navigate through this challenging period.

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Canaan’s Road To Recovery

While Canaan hasn’t performed as well as expected last year, investors are wondering what’s next for the stock. One way to gauge this is by looking at the company’s earnings outlook. Changes in earnings estimates can have an impact on stock movements.

Currently, the estimate revisions for Canaan are mixed, resulting in a Zacks Rank #3 (Hold) for the stock. This suggests that the stock is expected to perform in line with the market. It will be interesting to see how the estimates for the upcoming quarters and fiscal year change in the future.

Also, these losses have made the company focus on implementing strategies to recover and regain financial stability. They are working on improving the efficiency and performance of their Bitcoin mining machines, exploring opportunities in emerging technologies and markets, and enhancing customer support services.

The firm has been solidifying partnerships with other major players in recent times with the goal of boosting its market share. As reported earlier by TheCoinRise, Canaan successfully obtained additional purchase orders from Cipher Mining and Stronghold Digital Mining, totaling over 17,000 Bitcoin mining machines. With the halving and the need to reboot efforts, more related orders are likely with a massive upward impact for the firm.