Canaan Technology's stock price plummeted 29%! Last year's revenue was 450 million, and its net loss was 220 million

According to the financial report, Canaan Technology's total revenue in the fourth quarter of 2020 was 38.246 million yuan, 463 million yuan in the same period of 2019, and 163 million yuan in the third quarter of 2020. The net loss was 71.955 million yuan, narrowing from the net loss of 798 million yuan in the same period of 2019, and the net loss in the third quarter of 2020 was 86.406 million yuan. The adjusted net loss was 73.1 million yuan, narrowing from the net loss of 751 million yuan in the same period of 2019, and the net loss in the third quarter of 2020 was 84.77 million yuan.

As of the close of trading on April 12, Eastern Time, Canaan Inc.'s stock price was $13.14, a 29.62% drop from the previous day's closing price.

Partial screenshot of Canaan Technology's 2020 fourth quarter profit and loss statement

In 2020, Canaan Technology achieved total revenue of 448 million yuan, compared with 1.423 billion yuan in 2019. However, the net loss narrowed to 215 million yuan, and the net loss reached 1.035 billion yuan in 2019. The adjusted net loss was 221 million yuan, compared with a net loss of 764 million yuan in 2019.

Partial screenshot of Canaan Technology's full-year profit and loss statement

The market demand for mining machines has increased significantly, and the company's inventory is insufficient

Since the second half of 2020, the price of Bitcoin has soared from $10,000 to around $60,000 today. As a Bitcoin mining machine manufacturer, Canaan Technology's performance is deeply affected by the price of Bitcoin, but the impact is delayed.

Canaan Technology mentioned in its financial report that the main reason for the year-on-year and quarter-on-quarter decline in revenue in the fourth quarter of 2020 was the decline in total computing power sold. Although the market demand for mining machines increased significantly in the fourth quarter as the price of Bitcoin rose, the company did not have enough inventory to deliver to customers.

The financial report shows that in the fourth quarter of 2020, Canaan Technology's total sales computing power was 200,000 Tash/second, a year-on-year and month-on-month decrease of 93.1%. The total sales computing power for the whole year was 6.6 million Tash/second, a year-on-year decrease of 37.1%.

As for the reason for the decline in full-year revenue, Canaan Technology explained that it was due to the year-on-year decline in total computing power sold in the first three quarters of 2020. It said that as the price of Bitcoin soared in the fourth quarter of 2020, the demand for mining machines in the market began to recover, and the company received a large number of orders, which will be delivered mainly in 2021.

In the fourth quarter of 2020, Canaan Technology received orders for more than 92,000 units. As of the end of the first quarter of 2021, the pre-sale of mining machines exceeded 156,000 units. As of the end of 2020, Canaan Technology had reached a total order contract of 1.131 billion yuan, of which 429 million yuan was prepaid for sales, an increase of 81.8% month-on-month. As of the end of the first quarter of 2021, the pre-sale of mining machines exceeded 156,000 units, and the pre-payments exceeded 1.547 billion yuan.

In terms of cost expenditure, Canaan Technology's cost expenditure in 2020 was 410 million yuan, a year-on-year decrease of 78.9%. The year-on-year decrease in revenue cost was consistent with the changes in its computing power sales and cost per Tash.

In addition, Canaan Technology's operating expenses (sales expenses + R&D expenses + administrative expenses) reached a total operating expense of 292 million yuan for the whole year, a year-on-year decrease of 45.8%. Among them, in terms of R&D, Canaan Technology's R&D expenses in the third quarter were 140 million yuan, a year-on-year decrease of 17.1%, mainly due to changes in materials used for R&D. Sales and marketing expenses were 20 million yuan, a year-on-year decrease of 8.8%, mainly due to reduced travel expenses. General and administrative expenses were 132 million yuan, a year-on-year decrease of 62.1%, mainly due to the increase in general and administrative expenses in the second quarter of 2019.

In terms of its performance forecast for 2021, Canaan Inc. believes that as the price of Bitcoin rises, its revenue will increase significantly in 2021, and it expects its total revenue in the first quarter of 2021 to be no less than 400 million yuan.

Start self-operated mining business

In terms of business, Zhang Nangeng, chairman and CEO of Canaan Technology, stated in the financial report that in the fourth quarter of 2020, Canaan Technology began mass production of the next-generation A12 series Bitcoin mining machines, and large-scale delivery began in the first quarter of 2021. In addition to consolidating the core mining machine business, it has also made progress in the fields of artificial intelligence and artificial Internet of Things, and designed two new series of AI chips, which will be put into production in the second half of 2021.

At the same time, Canaan Technology also stated that it will carry out self-operated mining business in North America or Central Asia in the second quarter of this year. Self-operated mining business can well balance the fluctuations of Bitcoin market, avoid spot inventory, and help the company obtain dividends during the Bitcoin bull market. At present, an operating entity has been established in Singapore to prepare for mining business, and lawyers have been hired in Singapore, Kazakhstan and the United States to provide legal services for mining business.

Canaan Technology said that in the second quarter, it plans to deploy thousands of machines for its own mining, consisting of A12 and A11 series mining machines, with a total computing power of between 350PH and 450PH.

In addition, Canaan Technology pointed out that its customer types are constantly being optimized, including overseas listed companies, such as Hive Blockchain, a listed mining company in Canada, and Core Scientific, a global veteran mining giant in the United States.

Mining machine manufacturer Canaan Technology is a company that provides supercomputing solutions through proprietary high-performance computing ASIC chips and is also the "first mining machine stock". On November 21, 2019, Canaan Technology was successfully listed on the Nasdaq in the United States at an issue price of US$9.

As of the close of trading on April 12, Eastern Time, Canaan Inc.'s stock price was $13.14, a 29.62% drop from the previous day's closing price. Looking at the trend over the past year, Canaan Inc.'s stock price began to rise slightly in November 2020, and began to rise sharply in February 2021, reaching a high of $39.10.