Ebang International may be listed on Nasdaq on the 26th, and these four factors may become the biggest challenges

On April 24, Ebang International submitted an IPO application to the US SEC, shocking the entire mining industry. Is the second blockchain stock about to be born?

On the evening of June 20, a US stock IPO APP showed that Yibang International IPO started new stock subscription activities, and the subscription period was from 22:00 on June 19 to 10:00 on June 24.

It is reported that Ebang International will be officially listed on June 26. This is similar to the information that Babbitt had previously obtained from people close to Ebang International. This means that Ebang International's listing in the United States is almost a foregone conclusion, and the second mining stock is about to be born.

There are four major uncertainties in the listing of Ebang International

What are the highlights of Yibang International's listing? On June 17, Yibang International revealed a lot of information in its updated prospectus, such as.

1. It is planned to be listed on NASDAQ with the stock code "EBON".

2. It plans to issue about 19 million shares, with an issue price range of US$4.5-6.5, and a fundraising scale of US$86.94 million to US$125 million. Based on this estimate, its market value may be between US$590 million and US$850 million.

3. The funds raised will be used for the development and launch of new mining machines; corporate branding and marketing activities; and the expansion of overseas business and new business.

Previously, when Canaan Creative went public, Bitcoin was still in the anticipation of a halving bull market, and the market was quite hot. But today, the situation of Ebang International is a bit bad, with at least four major uncertainties.

1. The output of Bitcoin mining has been halved, and the computing power has skyrocketed to 11E. It is difficult to make money from mining, and the industry is in recession.

2. The COVID-19 pandemic has affected the global economy, and the shadow has yet to dissipate.

3. After the Luckin Coffee fraud incident, Chinese stocks listed in the US have been affected by negative factors and are facing a crisis of trust.

4. Canaan Creative, which has been listed for one year, has fallen from US$9 to US$2, with dismal performance.

So, what will happen to Ebang International? We will have to wait and see.

Who is Ebang International?

Many blockchain newcomers may not have heard of Ebang International. Like Canaan Creative, it is a mining machine manufacturer in Hangzhou.

As early as January 2010, when the company was founded, 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+. After that, after the bull market in 2017, Ebit E10 performed outstandingly, basically establishing its position in the top three of the mining industry.

In the latest report from BitMEX Research Institute, Ebang International's ASIC mining machine market share ranks fourth after Canaan Creative. Judging from the market share, there is still a big gap with the previous three.

Judging from the financial report data it proactively disclosed.

Hu Dong, the founder of Ebang International, holds the largest share of equity, at 41.82%. The company's revenue mainly comes from three sources, but the sales of Bitcoin mining machines and accessories are the largest, accounting for 82.4% in 2019. In 2019, Chinese market customers accounted for 87.5%.

In terms of specific operating data, its revenue was US$319 million and US$109 million in 2018 and 2019, respectively, but its net profit was a loss of US$11.81 million and US$41.07 million, respectively.

In short, according to it, its declining profit level and tight cash flow make it difficult for cash resources to meet its development needs.

This is true. In addition, since the halving of Bitcoin output in May, the price of Bitcoin has not risen as expected, and miners are in a difficult situation. Many people interpret the listing of Ebang International as a last resort.

What will be the result of listing in the United States?

After Canaan Creative's listing on the U.S. stock market, it has faced a series of challenges, including declining performance, halving of its stock price, short selling by investment banks, and collective rights protection by investors.

Therefore, the market is very concerned about what will happen to Ebang International's IPO.

Cheng Xiaoming, a well-known expert on the New Third Board and deputy director of the Blockchain Committee of the China Communications Industry Association, told Babbitt that there are probably several reasons why both Chinese mining companies chose to go public in the United States.

From a policy perspective, the mainland is more cautious and listing is more difficult, while Hong Kong is more tolerant, but naturally not as good as the U.S. securities market. From a valuation perspective, domestic valuations are higher, so listing in the U.S. can be said to be the next best option.

“But from the perspective of the blockchain industry, the global center is still in the United States, and this is even more true for technological hardware such as mining machines. There are both passive and active factors.”

So, in today's environment, will Yibang International have a difficult time?

Cheng Xiaoming believes that the US is generally repulsive to Chinese concept stocks, and even suppresses them, but it does not mean that they will not be allowed to go public at all. It only requires Chinese companies going public in the US to accept audits and due diligence by US institutions and make corresponding declarations in accordance with relevant US regulations. However, the China Securities Regulatory Commission does not support this approach. Companies need to handle the relationship between the two sides well and comply with the rules of the game on both sides.

Although today's economic environment does not seem to be "friendly" to Yibang International's listing, some analysts pointed out that Yibang International's listing financing situation is ultimately related to the company's own situation and market demand.

In short, Yibang International is still likely to be sought after by capital. The latest prospectus shows that it has increased the amount of funds raised, which is likely because Yibang International has made preparations before the listing and is quite confident about the listing.

Assuming that Ebang International is successfully listed and recognized by investors, this will be a great encouragement for other domestic mining machine manufacturers and even blockchain entrepreneurs.

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