Bitcoin Miner Maker Canaan Down by 0.11% on First Trading Day, But the Whole Industry Shows Great Confidence
China-based bitcoin mining machine manufacturer Canaan Creative has finally concluded its initial public offering (IPO) with $90 million raised.
Shares of Canaan – CAN – shot up 40 percent shortly after opening and saw a maximum gain of more than 44 percent, but it soon turned down, dipping below the IPO price in less than half an hour and slipping to an intraday low of $8.21. In the company’s market debut Thursday, it registered a modest 0.11 percent decline at $8.99.
The opening trade was $12.6 per share, above its IPO pricing of $9 per share, which was at the high end of expectations. The offering raised a total of $90 million and initially valued the bitcoin miner mega-seller at $1.42 billion.
Although the company’s final fund raised was over 75% less than the initially expected $400 million target, its successful IPO has received plenty of praise and was considered a milestone for the blockchain/crypto industry.
“This listing is actually a link, a link between the traditional capital market and the new (blockchain) industry, and a link between the traditional world and the new economic world, which may lead to more chemical reactions. We also expect more people to have a better and more comprehensive understanding about blockchain and artificial intelligence,” said Canaan’s co-chairman Kong Jianping.
Following its public listing, investors will now be able to acquire a stake in Canaan, which gives speculators a chance to get involved in the cryptocurrency market without needing to actually invest in the volatile cryptocurrencies directly. For better or worse, this will give normal investors a say in the direction the company moves forward.
IPO road full of twists and turns
The company, which created the first bitcoin ASIC miner Avalon, had made many attempts in seeking public but failed both in mainland China and Hong Kong before heading to the U.S.
In 2016, the company had tried to list on Shenzhen Stock Exchange via a back-door listing, but the plan was canceled after failing to satisfy the regulatory requirements; In August 2017, the company submitted a listing application to the NEEQ, but ultimately it retreat from the domestic market for unfriendly policy known as the ICO ban; In May 2018, Canaan made a comeback targeting the Hong Kong market, but it let its IPO application lapse six months later.
As a bitcoin miner producer, over 99% of its revenue comes from sales of bitcoin miner and related components, so fluctuations in the price of bitcoin have a direct impact on its business performance. In 2018, bitcoin plunged more than 70 percent; in the same year, Canaan’s IPO attempt in Hong Kong failed, the IPO plans of its two rivals – Bitmain and Ebang, also failed.
According to Canaan’s prospectus submitted on October 28, its profits fell sharply since 2018 amid the bitcoin crash. In the first half of 2019, Canaan reported a loss of $45.8 million with net revenue of $42.1 million. However, the company predicts a bright future for the soaring demand for bitcoin mining machines and its AI chip business for another.
Seeing the success of Canaan, other firms in the blockchain industry might also be considering an IPO of their own. In late October, another Chinese bitcoin mining giant Bitmain has reportedly filed for an IPO in the U.S.