Canaan Inc., (NASDAQ: CAN) Reports Lower-than-Expected Earnings and Revenue, Failing to Improve Profit Margin
Canaan Inc. (CAN) experienced a significant drop of 26.74% in its stock price on May 26th, as investors reacted to the company’s disappointing first-quarter results. The firm’s earnings per share (EPS) loss of $0.43 fell 105% short of the estimated EPS loss of $0.21 per share. Comparing year-over-year figures, Canaan Inc.’s earnings were down by a staggering 186% from $0.5 per share in the same period last year. It is important to note that the reported earnings were adjusted, making them potentially incomparable to previous reports and analyst estimates.
Market analysts had projected Canaan Inc.’s revenue to reach a consensus of $62.1 million for the first quarter. However, the company fell short of this estimate, with revenues totaling $55.2 million, missing expectations by $6.9 million (11%). Moreover, Canaan Inc. experienced a negative 74% growth in revenue compared to the year-ago quarter, where it reported $213.9 million. This decline in earnings growth relative to revenue indicates that the firm has been unable to improve its profit margin.
The difference between revenue growth and earnings growth suggests that Canaan Inc. has struggled to reduce costs, resulting in a decrease in its profit margin.
Prior to the release of these disappointing results, Wall Street analysts held an average rating of Strong Buy for Canaan Inc. stock, indicating their optimistic outlook. However, the company’s poor performance in the first quarter has prompted a reevaluation of its prospects.
On Friday, Canaan Inc. stock opened at $2.46, a decline from the previous day’s closing price of $2.58. Throughout the day, the stock traded within a range of $1.94 to $2.46. The trading volume reached 12,059,330 shares, significantly higher than the average volume of 1.81 million shares over the past three months. With a current market capitalization of $482.31 million, Canaan Inc. faces challenges in restoring investor confidence and turning its performance around.