Why Canaan's Stock Skyrocketed Today

Shares of Canaan (NASDAQ: CAN) surged as much as 21.3% higher on Thursday, following the release of impressive first-quarter results. By 3 p.m. ET, the stock had retreated to a still-impressive gain of 10.4%.

The maker of microchips and systems specially intended for mining Bitcoin had guided first-quarter sales to approximately 1,550 million Chinese renminbi, 290% above the year-ago period's result. That didn't quite happen. Canaan's first-quarter revenue stopped at 1.356 million renminbi, which translates to roughly $214 million.

On the other hand, adjusted earnings landed at $0.41 per American depositary share (ADS), up from $0.01 per ADS in the first quarter of 2021. Furthermore, Canaan's revenue was limited by accounting practices as prepayments for crypto-mining machinery were recorded as prepayments and matching contract liabilities. These payments will move onto the income statement in future reports, as the prepaid chips and systems are delivered to customers. In the first quarter, the balance of prepaid contracts rose by 436 million renminbi, or $67.7 million.

Source Fool.com