Some Canaan Inc. (NASDAQ:CAN) shareholders are probably rather concerned to see the share price fall 49% over the last three months. Despite this, the stock is a strong performer over the last year, no doubt about that. Indeed, the share price is up an impressive 262% in that time. So some might not be surprised to see the price retrace some. More important, going forward, is how the business itself is going.
Given that Canaan didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Canaan saw its revenue shrink by 46%. We're a little surprised to see the share price pop 262% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. Of course, it could be that the market expected this revenue drop.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at Canaan's financial health with this free report on its balance sheet.
A Different Perspective
Canaan boasts a total shareholder return of 262% for the last year. Unfortunately the share price is down 49% over the last quarter. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for Canaan (1 is concerning) that you should be aware of.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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