Robbins Geller Rudman & Dowd LLP (https://www.rgrdlaw.com/cases-canaan-class-action-lawsuit.html) today announced that it filed a class action seeking to represent purchasers of Canaan Inc. (“Canaan” or the “Company”) (NASDAQ:CAN) American Depositary Receipts (“ADRs”) during the period between February 10, 2021 and April 9, 2021 (the “Class Period”) (the “Canaan class action lawsuit”). The Canaan class action lawsuit was filed in the Southern District of New York and is captioned Denny v. Canaan Inc., No. 21-cv-03299.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Canaan ADRs during the Class Period to seek appointment as lead plaintiff in the Canaan class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts 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 in any potential future recovery of the Canaan class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff in the Canaan class action lawsuit, you must move the Court no later than 60 days from today. If you wish to discuss the Canaan class action lawsuit or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Mary K. Blasy of Robbins Geller, at 800/449-4900 or 631-454-7719 or via e-mail at mblasy@rgrdlaw.com. You can view a copy of the complaint as filed at https://www.rgrdlaw.com/cases-canaan-class-action-lawsuit.html.
The Canaan class action lawsuit charges Canaan and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Canaan designs, manufactures, and sells bitcoin mining machines, primarily in the People’s Republic of China.
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.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For eight consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.
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Contacts
Robbins Geller Rudman & Dowd LLP
Mary K. Blasy, 800-449-4900
mblasy@rgrdlaw.com
