The Bitcoin mining device maker Canaan (NASDAQ: CAN) stock price nosedived after reporting a 75% year over year drop in third-quarter revenues as the company offloaded inventory at a lower price. However, the company says it has started receiving new orders as the Bitcoin rally helped in improving the bitcoin miner’s margins.
Despite the selloff, Canaan stock price is still up 115% in the last month, thanks to bitcoin price appreciation of more than 160% this year.
Canaan stock price selloff represents an attractive entry point for investors who strongly believe in bitcoin adoption. This is because analysts from prominent firms like Citi hinted that the digital coin is poised to trade above $300K next year.
Fundamentals look strong despite Q3 loss
The third quarter revenue of Bitcoin mining device maker came in at $24 million while loss per share stood around $0.08. The company says pandemic related challenges have significantly impacted demand for its products.
On the positive side, third quarter revenue fell only 8% from the second quarter this year as the bitcoin mining company has started receiving orders for mining products.
“The demand for mining machines in the market continued to rebound during the third quarter, and we have received a large number of pre-sale orders which are scheduled for delivery starting in the fourth quarter of 2020, Mr. Quanfu Hong, Chief Financial Officer of Canaan, stated.
Bitcoin price rally strengthens margins
The bitcoin price rally is likely to enhance margins for miners. The market reports are suggesting that bitcoin miners need the price of a single bitcoin to hover above $10,000 for breakeven.
Fortunately, Bitcoin price is currently trading around $19K, with expectations that institutional investments and a higher adoption rate would further improve the price of the largest coin. For Canaan, the price hike is likely to compel new miners to purchase mining related products.