Bitcoin mining equipment manufacturer, Canaan (CAN) which is listed on Nasdaq had its IPO towards the end of November in 2019. At the time of listing, CAN was trading around $8.9. But during these four and a half months, it lost 64% of its value and is currently trading at $3.20.
CAN price has been below $3 since March 16 which went to its lowest the next day at $2.81, this low came just a few days after the price of Bitcoin crashed 53%.
However, if we look at Bitcoin price’s journey since CAN was first listed for IPO, BTC is only down about 8%, currently trading around $6,800 with 24 hours loss of 6.62%.
“Pick-and-shovel play is not really going as planned. CAN has been a disaster since IPO,” said analyst Ceteris Paribus.
These losses came into focus after the firm released its unaudited earnings report on Thursday. The China-based bitcoin miner maker contributed 10.5 EH/s (20%) of computing power to the growing computing power of the Bitcoin network last year.
The company reported a net total loss of $148 million for 2019, half of the revenue it generated in the previous year, and $114.7 million in Q4 of 2019.
Nangeng Zhang, founder and CEO of Canaan said in an earnings call on Thursday that they saw a spike in its BTC mining equipment sales in October and November but only for a “considerable drop” in December. During this time, BTC price went from $8,350 on Oct. 1st to $9,670 on Oct. 20 only to plummet to $6,400 in mid-December.
Now, the company is expecting more losses in 2020, “For the first quarter of 2020, the Company expects total revenues not less than RMB60 million [$8.5 million],” reads the report.
And this is because of the coronavirus pandemic affecting the global markets along with crypto space and the economy.
“As a result of the impact of the COVID-19 outbreak, a widespread health crisis that adversely affected general commercial activities, the economies, financial markets, as well as the cryptocurrency market activities, we have lowered our expectations for business in the year of 2020.”
Besides the grim picture painted by the company’s profitability, Canaan is also hit with a class-action lawsuit that has a deadline of May 4, 2020. The plaintiff, an investor who bought shares of the company, accused them of making misleading statements and also violating US securities laws.