Canaan (CAN) AI Stock Analysis

• Market Cap: $219.33M
• Dividend Yield: N/A
• Average Volume (3M): 34.74M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.63
• Revenue Growth: 65.68%
• EPS Growth: 50.28%
• Country: US
• Employees: 463
• Sector: Technology
• Sector Strength: 84
• Industry: Computer Hardware
• EPS (TTM): -0.27
• Shares Outstanding: 399,488,600
• 10 Day Avg. Volume: 39,042,551
• 30 Day Avg. Volume: 34,744,484
• PEG Ratio: -0.06
• Price to Book (P/B): 0.58
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -1.75
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $3.88
• Price Target Upside: 431.51% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 43 Neutral
• Price Target: $0.50 ▼(-31.51%Downside)

Canaan's overall stock score is primarily influenced by its weak financial performance, reflected by negative profit margins and cash flow challenges. Technical indicators and poor valuation metrics further weigh down the score. While the recent earnings call showed some positive revenue growth, the withdrawal of guidance and external economic pressures present significant risks.

Positive Factors

Financial Performance

Canaan Inc. reported its highest quarterly revenue in five quarters, with a year-over-year rise of 120.9%.

Growth Potential

Advancements in bitcoin equipment manufacturing, combined with the expansion of its self-mining activities, have positioned Canaan Inc. favorably for future growth.

Market Valuation

Canaan Inc. trades at just 0.3x FY25E EV/revenue, which is significantly lower than its closest competitors, indicating potential undervaluation.

Negative Factors

Guidance Uncertainty

Management withdraws FY25 guidance amid tariff uncertainty.

Pricing Pressure

Selling through the Avalon A14 inventory pressured pricing to the $8.58/Th level in 3Q24, by our calculations.

Regulatory Challenges

The imposition of tariffs by the U.S. government impacted CAN’s customer order flow and self-mining deployments, with demand for its bitcoin mining rigs from North American customers remaining under pressure.

Canaan Business Overview & Revenue Model

Company Description

Canaan Inc. engages in the research, design, and sale of integrated circuits (IC), and lease of final mining equipment by integrating IC products for bitcoin mining and related components in the People's Republic of China. It is also involved in the assembly and distribution of mining equipment and spare parts; and distribution of artificial intelligence products, as well as mining business. The company has operations in the United States, Australia, Kazakhstan, Canada, Indonesia, Mainland China, Malaysia, Thailand, Cyprus, and internationally. Canaan Inc. was founded in 2013 and is headquartered in Singapore.

How the Company Makes Money

Canaan Inc. generates revenue primarily through the sale of its proprietary blockchain servers and ASIC microprocessors, which are used by customers to mine cryptocurrencies such as Bitcoin. The company's revenue model is heavily reliant on the demand for cryptocurrency mining equipment, which fluctuates based on market conditions and cryptocurrency prices. Canaan also explores additional revenue streams through its ventures into AI development, though this segment currently represents a smaller portion of its overall revenue. The company's earnings are influenced by its ability to maintain competitive pricing, technological advancements in its products, and strategic partnerships within the tech and crypto industries.

Canaan Financial Statement Overview

Summary

Canaan is experiencing significant financial challenges with consistent losses and negative cash flows. The company has faced revenue fluctuations, and its profit margins are negative, indicating operational inefficiencies. Despite manageable debt levels, the financial health is weak due to ongoing net losses and negative cash flow trends.

Income Statement

Canaan has experienced significant revenue fluctuations over the years, marked by a decline from 2019 to 2023. The gross profit margin has consistently been negative, indicating challenges in covering production costs. The net profit margin is also negative, reflecting ongoing losses. Despite a brief positive turn in 2021, recent years have shown negative EBIT and EBITDA margins, highlighting persistent operational inefficiencies.

Balance Sheet

The company's debt-to-equity ratio remains relatively low, suggesting manageable leverage levels. However, the equity ratio has decreased over recent years, indicating shrinking equity relative to assets. Return on equity is negative, reflecting the company's inability to generate profits from shareholders' equity. Despite these challenges, the balance sheet shows some liquidity strength with cash reserves.

Cash Flow

Canaan's cash flow analysis reveals negative trends in operating and free cash flow, indicating challenges in generating cash from core operations. The free cash flow to net income ratio is negative, consistent with the company's net losses. While financing activities have provided liquidity, the negative growth in free cash flow raises concerns about long-term sustainability.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
269.32M	211.48M	656.32M	771.14M	68.58M
	Gross Profit
-84.32M	-240.78M	231.98M	440.83M	5.79M
	EBIT
-227.13M	-410.88M	43.25M	282.38M	-38.89M
	EBITDA
-143.33M	-330.11M	84.51M	285.16M	-34.11M
	Net Income Common Stockholders
-249.75M	-414.15M	70.40M	308.44M	-32.95M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
96.49M	96.15M	105.65M	421.67M	69.50M
	Total Assets
463.01M	493.30M	690.00M	884.74M	158.76M
	Total Debt
94.99M	1.43M	1.45M	2.56M	5.83M
	Net Debt
-1.50M	-94.73M	-100.85M	-419.11M	-54.11M
	Total Liabilities
196.76M	145.11M	77.86M	341.44M	92.50M
	Stockholders Equity
266.25M	348.19M	612.13M	543.31M	66.26M
Cash Flow		Free Cash Flow
-218.57M	-126.93M	-201.82M	196.23M	6.15M
	Operating Cash Flow
-199.26M	-123.62M	-183.94M	201.86M	6.48M
	Investing Cash Flow
60.97M	39.63M	―	846.22K	―
	Financing Cash Flow
139.75M	90.00M	-56.59M	138.93M	-17.15M

Canaan Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 0.73
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAN, the sentiment is Positive. The current price of 0.73 is above the 20-day moving average (MA) of 0.68, above the 50-day MA of 0.72, and below the 200-day MA of 1.33, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 53.69 is Neutral, neither overbought nor oversold. The STOCH value of 75.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CAN.

Canaan Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	62 Neutral	$11.93B	10.60	-7.51%	3.00%	7.40%	-8.09%
MKFG	49 Neutral	$98.34M	―	-68.97%	―	-9.27%	19.30%
NNDM	47 Neutral	$325.82M	―	-10.27%	―	―	―
DDD	43 Neutral	$251.00M	―	-99.85%	―	-8.09%	22.06%
CAN	43 Neutral	$219.33M	―	-90.43%	―	65.68%	50.28%
QMCO	41 Neutral	$69.25M	―	33.98%	―	-17.08%	-223.70%
EBON	41 Neutral	$24.02M	―	-7.51%	―	20.88%	―