Canaan (CAN) AI Stock Analysis

• Market Cap: $229.54M
• Dividend Yield: N/A
• Average Volume (3M): 49.00M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.66
• Revenue Growth: 65.68%
• EPS Growth: 50.28%
• Country: US
• Employees: 463
• Sector: Technology
• Sector Strength: 94
• Industry: Computer Hardware
• EPS (TTM): -0.03
• Shares Outstanding: 399,488,600
• 10 Day Avg. Volume: 34,516,199
• 30 Day Avg. Volume: 48,996,876
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 0.73
• Enterprise Value/Gross Profit: -5.01
• Enterprise Value/Ebitda: -1.13
• 1Y Price Target: $2.16
• Price Target Upside: 176.92% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 44 Neutral
• Price Target: $0.50 ▼(-35.90% Downside)

Canaan's overall stock score is primarily impacted by its poor financial performance, characterized by consistent losses and negative cash flows. While the earnings call showed some positive revenue growth, significant challenges remain due to macroeconomic factors and strategic uncertainties. The technical analysis and valuation also reflect a cautious outlook, with mixed signals and a negative P/E ratio.

Positive Factors

Growth Potential

Efforts to develop next-generation bitcoin mining equipment and expand global hash rate suggest promising growth potential for Canaan Inc.

Stock Buyback

The company's board of directors has approved a $30 million stock buyback program, which could support the share price.

Valuation

Canaan Inc.'s bitcoin holdings and net cash exceed its market capitalization, indicating potential undervaluation of the stock.

Negative Factors

Market Conditions

Due to unforeseen market conditions, Canaan and the institutional investor decided to terminate the agreement with regard to the second tranche of $100M.

Nasdaq Delisting

Canaan Inc. received a delisting notice from Nasdaq after its stock traded below $1.00 for 30 consecutive business days.

Tariffs

Canaan Inc. faces uncertainty due to U.S. tariffs impacting demand for its bitcoin mining equipment.

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 ASIC (Application-Specific Integrated Circuit) mining hardware, which is widely used in the cryptocurrency mining industry, particularly for Bitcoin. These mining machines are sold to individual miners, mining pools, and large-scale mining operations. Additionally, the company has expanded into the AI sector, offering AI chips and systems designed for smart devices and data centers. Canaan's earnings are significantly influenced by the demand for cryptocurrency mining equipment, which is in turn affected by the price of cryptocurrencies and advancements in mining technologies. Strategic partnerships and collaborations with other technology firms also contribute to its revenue streams, enhancing its market reach and product offerings.

Canaan Financial Statement Overview

Summary

Canaan faces significant financial challenges, with consistent losses, negative cash flows, and declining revenues. Despite a manageable debt load, negative profit margins and cash flow trends highlight operational inefficiencies.

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
EBITDA	-143.33M	-330.11M	84.51M	285.16M	-34.11M
Net Income	-249.75M	-414.15M	70.40M	308.44M	-32.95M
Balance Sheet
Total Assets	463.01M	493.30M	690.00M	884.74M	158.76M
Cash, Cash Equivalents and Short-Term Investments	96.49M	96.15M	105.65M	421.67M	69.50M
Total Debt	94.99M	1.43M	1.45M	2.56M	5.83M
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: 0.78
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 0.78 is above the 20-day moving average (MA) of 0.74, above the 50-day MA of 0.71, and below the 200-day MA of 1.27, indicating a neutral trend. The MACD of <0.01 indicates Negative momentum. The RSI at 54.52 is Neutral, neither overbought nor oversold. The STOCH value of 85.99 is Negative, 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 *	61 Neutral	$36.26B	7.13	-7.26%	1.97%	7.76%	-8.61%
MKFG	49 Neutral	$98.34M	―	-68.97%	―	-9.27%	19.30%
DDD	48 Neutral	$292.42M	―	-46.51%	―	-9.11%	58.95%
NNDM	48 Neutral	$299.85M	―	-9.62%	―	7.35%	16.59%
CAN	44 Neutral	$229.54M	―	-90.43%	―	65.68%	50.28%
QMCO	41 Neutral	$51.37M	―	33.98%	―	-17.08%	-223.70%
EBON	41 Neutral	$27.20M	―	-7.51%	―	20.88%	―