Mining Rig Maker Canaan’s Stock Fell 11%, Despite Record Q2 Profits
Chinese mining rig maker Canaan’s share price lost almost 11% of its share price during trading yesterday, despite posting its best-ever revenue and profits yesterday.
The Beijing-based manufacturer closed at $8.21 on the Nasdaq yesterday, down from $9.52 on market open on the same day, according data from Bloomberg.
In its Q2 earnings, Canaan said it sold a record 5.9 million terahash/second, up 200% quarter on quarter and 127% year on year. Correspondingly, revenues were up 507% year on year, to RMB 1.1 billion ($167.5 million). The company recorded $37.9 million in net income, up from $186,000 in Q1 and a loss of $2.6 million in Q2 2020.
The company forecast a Q3 revenue increase of 10% to 30% from the Q2, which translates to $184.25 million and $217.75 million. Analyst estimates weren’t available.
Despite the record earnings, investors didn’t take well to “management’s lackluster guidance and mention of industry-wide challenges, including wafer supply instability, regulatory uncertainties and bitcoin price fluctuations,” Esme Pau, head of emerging technology research at China Tonghai Securities, told CoinDesk in a WeChat message.
At the earnings call yesterday, investors pressed Chairman and CEO Nangeng Zhang, CFO James Cheng, and Senior Vice President of Technology Jingjie Wu about wafer procurement in light of a global chip shortage and rising demand for mining rigs worldwide, according to a transcript by Seeking Alpha.
The CEO said that the company is negotiating with foundry partners “for the next 9 to 18 months, mainly till the second half of next year.” Canaan hasn’t received “any verbal or written guarantees” from foundries about additional capacity in 2022, Zhang added.
Read more: ASIC Maker Canaan Diversifies Into Bitcoin Mining in Kazakhstan
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