Why Is Canaan (CAN) Stock Up Today?

Chinese tech company Canaan (NASDAQ:CAN) is everywhere today after jumping more than 38% on a stock buyback announcement. Today’s jump comes just two days after CAN stock plunged 15% amidst speculation of crypto mining regulations proposed in Europe. As such, Canaan investors have been on a roller coaster this week

web browser showing Canaan (CAN) logo on website
Source: shutterstock.com/Jarretera

What’s going on with CAN stock today?

Well, the computing solutions company just announced changes to its fiscal first-quarter outlook for 2022. Canaan disclosed the effects that the recent pandemic protocols enacted in China will have on its bottom line. Reasonably so, some cities in China have shut down due to a renewed presence of Covid-19, affecting factories and warehouses.

For Canaan, this has meant suspended delivery of many of its Bitcoin (BTC-USD) mining machines. These machines, in most cases, have already been partially or fully paid for. The company expects a number of its deliveries to be backlogged to Q2 2022. This will adversely affect its revenue recognition for Q1.

So, with that said, what’s behind today’s jump?

CAN Stock Soars as Company Plans Stock Repurchase

Along with delayed deliveries this quarter, Canaan outlined plans to buy back up to $100 million worth of its outstanding shares. The company revealed that its board of directors authorized the share repurchase program, which will start today and take course over the next 24 months. Canaan Chairman and CEO Nangeng Zhang said the following on the decision:

“We noticed that the recent international frictions, the domestic quarantine measures for COVID-19 control, and macro factors across the capital market have adversely impacted our stock performance. Given the strong fundamentals and cash position of the Company, we would like to allocate additional capital to drive value for our shareholders.”

Stock buybacks are frequently a bullish signal for many investors. This appears to be the logic behind CAN stock’s jump today. Now, CAN investors are surely pleased with its performance following an otherwise disastrous past week.

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On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

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