Canaan Inc. Second Quarter Results Could Surprise Us To The Upside

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About: Canaan Inc. (CAN), Includes: BTC-USD, EBON, MARA, RIOT
by: KGR Ventures
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KGR Ventures
Long/Short Equity, Special Situations, debt
Summary

Canaan Inc. is a mispriced Bitcoin pure play with potentially 1x-2x upside achieved by simply converging with its only public competitor EBang, as well as the price of Bitcoin itself.

Its price had previously been highly correlated with Bitcoin, but that correlation broke down in mid-May 2020.

Its stock is now down over 60% year-to-date while the price of Bitcoin is up more than 60% during the same period – this divergence cannot persist.

The immediate catalyst for Canaan’s potential bull run is its second quarter results which should be released in late August and could surprise the market to the upside given the tremendous rally in the Bitcoin price and the consequent improvement in mining farm profitability.

Investment Thesis

Canaan Inc. (CAN) is the world's second largest bitcoin mining machine manufacturer by computing power according to independent market research firm Frost & Sullivan. Unlike other bitcoin-related high-flying stocks like Riot