Johnson Fistel, LLP Files Class Action Suit Against Canaan (CAN)
SAN DIEGO, April 16, 2021, / (PRNewswire)
Johnson Fistel, LLP announces that a class action lawsuit has commenced on behalf of shareholders of Canaan Inc. (NASDAQ: CAN) (“Canaan” or the “Company”) stock. The class action is on behalf of shareholders who purchased Canaan between February 10, 2021 and April 9, 2021, both dates inclusive (the “Class Period”). If you wish to serve as lead plaintiff in this class action, you must move the Court no later than June 14, 2021.
The Canaan class action lawsuit alleges that Canaan’s fiscal year 2020 (“FY20”) ended on December 31, 2020. On February 9, 2021, nearly six weeks later, Canaan announced that its former Chief Financial Officer (“CFO”), Quanfu Hong (“Hong”), had suddenly resigned effective immediately, providing no explanation as to why and citing only “personal reasons.” The next day, February 10, 2021, Canaan issued a press release announcing that its “revenue visibility ha[d] improved substantially” and making other positive statements about purported visibility into increases in the size and quality of orders the Company had been receiving. These statements were heralded by the investment community in light of former CFO Hong’s statements on November 30, 2020, that “the demand for mining machines in the market continued to rebound during the third quarter, and” that Canaan had “received a large number of pre-sale orders which [were] scheduled for delivery starting in the fourth quarter of 2020.” (“4Q20”). Predictably, the market reacted positively to these statements, driving up the market price of Canaan ADRs from their open of $6.91 each on Monday, February 8th, to close at $13.04 each on Friday, February 12th, an increase of nearly 90%.
Yet the statements Canaan issued during the Class Period about the Company’s business metrics and financial prospects were materially false and misleading in that they concealed that due to ongoing supply chain disruptions and the introduction of the Company’s next-generation A12 series bitcoin mining machines – which had cannibalized sales of the older product offerings – Canaan’s 4Q20 sales had declined more than 93% year-over-year compared to its fourth-quarter fiscal year 2019 (“4Q19”) sales and more than 93% quarter-over-quarter compared to its third-quarter FY20 (“3Q20”) sales. As a result, Canaan’s 4Q20 total net revenues had decreased to RMB38.2 million (US$5.9 million) from RMB463.2 million in 4Q19 and RMB163.0 million in 3Q20.
On Monday, April 12, 2021, before the opening of trading, Canaan issued a press release, finally disclosing its actual 4Q20 and FY20 financial results for the period ended December 31, 2020, including a 93% year-over-year decrease in computing power sold and net revenues for the quarter. On this news, the market price of Canaan ADRs collapsed from their close of $18.67 per ADR on April 9, 2021, to close at $13.14 per ADR on April 12, 2021, a decline of nearly 30%, on unusually high volume of approximately 60 million ADRs trading, more than three times the average daily volume over the preceding ten trading days.
A lead plaintiff will act on behalf of all other class members in directing the Canaan class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Canaan class-action lawsuit. An investor’s ability to share any potential future recovery of the Canaan class action lawsuit is not dependent upon serving as lead plaintiff.
Additionally, you can [click here to join this action]. There is no cost or obligation to you.
About Johnson Fistel, LLP:
Johnson Fistel, LLP is a nationally recognized shareholder rights law firm with offices in California, New York and Georgia. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits. For more information about the firm and its attorneys, please visit http://www.johnsonfistel.com. Attorney advertising. Past results do not guarantee future outcomes.