Ebang International successfully landed on Nasdaq, and its IPO price fell below the issue price on the first day

After 8:30 p.m. on June 26, at the InterContinental Hotel in Hangzhou, Hu Dong, the founder of Ebang International, announced the listing of Ebang International on the U.S. stock market, which means that Ebang International, the fourth largest mining machine manufacturer in China, has officially landed on the Nasdaq.

The stock code of EBON is EBON. In this IPO, EBON International issued a total of 19.3236 million American Depositary Shares (ADS), with a public offering price of US$5.23 per share. Assuming that the underwriters do not exercise the over-allotment option of up to 2.8897 million shares, the total issuance size of its initial public offering of 19.2643 million shares will be approximately US$100.75 million.

What is worrying is that the stock of Ebang International did not open until around 11:50 p.m. Beijing time, and its opening price was $4.6, a 12% drop from the initial offering price. At nearly 12:00, its stock price was $4.87, a 7% drop. It may be that it just opened and the fluctuation range is relatively large.

In a telephone interview with Leidi.com, Hu Dong, CEO of Ebang International, said that Ebang International is not positioned as a simple Bitcoin mining machine concept, but an ecosystem, including upstream and downstream. The listing will greatly enhance the brand of Ebang International and also help attract outstanding talents.

Unlike Canaan Technology's high-profile listing, Ebang International can be described as extremely low-key. On the one hand, due to the epidemic and other reasons, the founding team did not go to the United States to ring the bell, but invited practitioners to "cloud ring the bell" in Hangzhou. On the other hand, for such a major event as the listing, Ebang International did not make a big marketing move.

This low profile, coupled with the not-so-optimistic macroeconomic environment, has led many to speculate that Ebang International is likely to fall below its offering price, and that new investors will face losses. This is indeed the case.

In any case, the successful listing of Ebang International means that it has become the second Chinese mining machine manufacturer to be listed on the US stock market after Canaan Technology. At the same time, Hangzhou, which has successfully nurtured two US-listed blockchain companies, has once again taken center stage in the blockchain world.

Four times of impact on the capital market, realizing the dream of Nasdaq

Ebang International was first established in January 2010, when its business was mainly the production and development of communication network access equipment. It was not until the end of 2016 that it launched its first Bitcoin mining product, Ebit E9+, and entered the mining industry. After that, after the bull market in 2017, Ebit E10 performed outstandingly, once counterattacking Antminer and Avalon Miner, forming a three-way confrontation. But in the past two years, with the rise of Shenma Miner and Core Motion Miner, Ebang International's voice has gradually become smaller.

In the latest report from BitMEX Research Institute, Ebang International's ASIC mining machine market share ranks fourth after Canaan Technology. In terms of market share, there is still a big gap between it and the previous three.

Judging from the financial report data it proactively disclosed, Ebang International's revenue mainly comes from three parts, but the sales of Bitcoin mining machines and accessories are the largest, accounting for 82.4% in 2019. In 2018 and 2019, its revenue was US$319 million and US$109 million respectively, and its losses were US$11.81 million and US$41.07 million respectively.

According to Ebang International itself, its declining profitability and tight cash flow make it difficult for cash resources to meet its development needs.

Perhaps it is the particularly obvious cyclicality of the Bitcoin mining machine industry and the extremely fierce competition that has led Yibang International to seek a listing, but its road to listing can be said to be extremely bumpy.

As early as 2015, Ebang International was listed on the New Third Board. After being delisted, it failed twice in the Hong Kong Stock Exchange. Finally, with Canaan Technology successfully listing on the US stock market, Ebang International had to turn to the US stock market. Therefore, this is the fourth time for Ebang International to enter the capital market.

Many people are curious about why the US stock market succeeded while the Hong Kong stock market failed. Earlier, Cheng Xiaoming, deputy director of the Blockchain Committee of the China Communications Industry Association, told Babbitt that from a policy perspective, the tolerance of the mainland and Hong Kong is still not as good as that of the US securities market.

In addition, the US capital market is more mature, and companies can be listed even if they are losing money, which can meet the investment needs of investors at different levels. However, compared with A-shares, US stocks are more likely to break even.

The second mining stock is born. Will it change the mining landscape?

According to Ebang International, its revenue mainly comes from three sources: sales of mining machines and accessories, mining machine hosting and maintenance services, and sales of communication products and solutions.

With this Nasdaq listing, Hu Dong defined several tracks for the company's next development direction.

For example, blockchain expands to the upstream and downstream of the entire industrial chain, increases investment in dedicated integrated circuit chips, and continuously develops and sells cutting-edge blockchain supercomputing servers.

For example, building a professional cloud computing platform to serve small and medium-sized investors.

For example, upgrading hosting and maintenance services to computing center operations, providing services from entry-level site selection to investment and construction consulting, and then to upgrading to one-stop services.

For example, communication products and solutions will focus deeply on the development of 5G in the operator industry and provide new 5G applications for corporate customers.

For example, Ebang International will also gradually explore and deploy in the field of Fintech technology and finance. Regarding this, the media previously disclosed that Ebang International intends to try the field of cryptocurrency exchanges.

At the listing cloud bell ringing ceremony in Hangzhou, Hu Dong said in his listing speech: "We must give full play to the technological advantages accumulated in the fields of ASIC chips, blockchain technology applications, communication technology, etc. and the synergy advantages of strategic partners. We will continue to deepen our presence in existing industries, expand into more emerging industries, and accelerate the pace of internationalization."

For founder Hu Dong and the entire team, a successful listing is definitely not the end, but just the beginning.

Today, Canaan Inc.'s stock price has fallen a lot, and Bitmain is mired in disputes over its founders. Although Shenma Mining Machine has performed strongly, 2020 is bound to be a year of change for the mining machine industry. How will Ebang International's subsequent actions affect the entire industry? Perhaps we need to wait and see.

Canaan's stock price has plummeted, how will Ebang International perform remains to be seen

Canaan Inc., also a Hangzhou company, was listed on the Nasdaq in November 2019. On the opening day, Canaan Inc.'s stock price rose to $13, a 40% surge that triggered a trading suspension. But after the surprise, Canaan Inc.'s stock price gradually fell. Recently, it fell to $1.9, a drop of 85%. Although it is a stock price, it seems to have gone through the huge fluctuations in the price of the currency.

At the same time, Canaan Technology also suffered from short selling from US institutions, which shows that the Bitcoin-related mining machine business in the capital market is not smooth sailing, and doubts and challenges will always follow.

It can be said that Canaan's performance casts a shadow on the listing of Ebang International, which is also a mining machine manufacturer. Moreover, according to Ebang International's prospectus, its net operating losses have been expanding in the past two years. Even now, it still has customer rights protection and litigation disputes between companies. For US stocks that emphasize value investment, these challenges of Ebang International make people sweat for it. In addition, the price of Bitcoin continues to go sideways, and the development of the mining industry is not in full swing.

Whether Yibang International can be favored by US stock investors, the price in a short period of time after the opening may not reflect the actual supply and demand situation, and the future is still a big unknown.

But no matter what, the successful listing of Ebang International is itself an affirmation of Ebang International. It is also rare good news for China's Bitcoin mining industry. More capital and attention will be focused on the blockchain and Bitcoin industry.

Interestingly, Ebang International will be the first Chinese company to be listed on the U.S. stock market after the Luckin Coffee financial scandal. As the United States has raised its listing standards, Ebang International's successful listing is not only valuable, but also good news for Chinese stocks listed in the United States.

Then again, there was another Chinese stock listed on the U.S. stock market together with Ebang International, which soared at the opening. This may indicate from another perspective that the performance of Bitcoin and mining in the traditional capital market is far less popular than imagined.