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3 reasons why Canaan stock (CAN) might be a good buy in September

3 reasons why Canaan stock (CAN) might be a good buy in September
Jordan
Major
2 weeks ago
3 mins read

One of the world’s leading providers of high-performance computing systems, Canaan Inc. (NASDAQ: CAN), released its unaudited financial results for the second quarter of 2021 on Wednesday, 15 September, along with a change in the composition of the company’s board of directors.

Firstly, the firm achieved record-high results in multiple operating and financial metrics, including revenue, net income, gross profit, and Non-GAAP adjusted net income, according to PRNewswire.

#1 Impressive financial stats

In particular, the positive earnings report showed that the total computing power sold was 5.9 million Thash/s, a 200.0% increase from 2.0 million Thash/s in the first quarter of 2021, marking a new high.

Compared to a net loss of RMB16.8 million in the same period of 2020 and a net income of RMB1.2 million for the first quarter of 2021, the company’s net income was RMB245.0 million (US$37.9 million), marking the highest quarterly net profit since the company’s initial public offering (IPO) in 2019.

In addition, net revenues were RMB1,081.8 million (US$167.5 million), the highest quarterly sales in the company’s history, up 168.6% from RMB402.8 million in the first quarter of 2021.

#2 It operates in a ‘hot’ niche

Secondly, Canaan works in a highly contemporary niche working with cryptocurrency, mining, and blockchain that is expected to take off in the future. The massive annual and sequential growth was mainly attributable to the increased quantity of Bitcoin mining equipment being delivered due to high market demand. 

The company received a greater number of down payments due to the increased sales orders for Bitcoin mining equipment, on top of the net proceeds from its registered direct offering in May 2021.

Chairman and Chief Executive Officer of Canaan, Mr. Nangeng Zhang, stated:

“We delivered a remarkable performance in the second quarter of 2021. Despite unexpected regulatory policy dynamics and Bitcoin price volatility, we achieved record-high topline results as we delivered a robust 5.9 million Thash/s of computing power to our clients.”

#3 Positive technicals

Lastly, since July 2021, the company’s stock has been establishing higher lows, and the earnings might solidly improve the firm’s stock price.

Canaan closed yesterday in the stock market at $9.18 +0.51 (5.88%) on the day, at the time of publication, the stock was up pre-market $9.65 +0.47 (5.12%).

CAN 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

Notably, the business is trading above its 20, 50, and 200-day simple moving averages, typically utilized by stock investors as uptrend indications. As a result of recent performance and a price above the 20-day SMA, it appears that the firm’s short-term positive momentum might push it above the current level.

Furthermore, CAN does present a nice setup opportunity since prices have been consolidating lately for those looking for an entry point. A support zone ranging from $8.88 to $9.05 is formed by multiple trend lines and important moving averages in various time frames.

On the other hand, resistance at $9.27 from a trend line in the daily time frame, but the stock may break beyond that at market open in that case, a resistance zone ranging from $9.88 to $9.99is formed by a combination of multiple trend lines.

Ultimately, Canaan remains confident with its growth strategies, development plans, technological products, operational skills, and the sector’s enormous potential, despite industry-wide difficulties such as Bitcoin price fluctuations, wafer supply volatility, and regulatory concerns in different countries.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing your capital is at risk.

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Jordan Major
Author

Jordan is an investor and market analyst. He's passionate about stocks, ETFs, blockchain, and digital assets. At Finbold.com, he delves into the technicalities to obtain future trends for new market traders and gives insights into user-friendly platforms for beginners.