Struggling Canaan offloads shares to employees

ASIC hardware manufacturer Canaan Creative has filed a form that allows the company to offer its employees shares of the publicly-listed company in a benefits plan.

On May 27, Canaan filed an S-8, a form the U.S. Securities and Exchange Commission (SEC) requires companies to file if they are looking to issue equity to their employees. The filing shows that Canaan is looking to issue around $12.4 million worth of $CAN to its employees.

Who would want Canaan stock?

$CAN is down more than 50% year-to-date, and down more than 66% from its initial offering price of $8.99 when Canaan filed for IPO on Nasdaq in November. So will the employee’s really want to opt into the benefits plan that gives them shares of Canaan?

Canaan’s S-8 was filed shortly after Canaan’s 180-day lock-up period concluded on May 19. An IPO lock-up period is a restriction that prevents company insiders from selling shares in the company for a specified number of days following an IPO. Canaan shares were already performing poorly in the market, but now that company insiders can begin offloading their shares of $CAN, it will only get worse. Since the lock-up period ended on May 19, $CAN is down 33%.

Will Canaan get delisted from Nasdaq Exchange? 

Recently, Nasdaq cracked down on companies based in China that are looking to list on their exchange. Although Canaan is available on the Nasdaq exchange, Nasdaq’s new rules are going to make it challenging for Bitmain and Ebang, two ASIC hardware manufacturers based in China, to go public in America.

Chinese companies are not always held to the same compliance and accounting standards as American companies. Unfortunately, this puts retail investors in America at risk and makes them more susceptible to being victims of fraud. Luckin Coffee ($LK) allegedly fabricated $310 million worth of sales and trading of Luckin Coffee was halted shortly after that information was discovered. Although trading of $LK has resumed, Nasdaq moved forward and issued a statement saying they plan to delist Luckin Coffee. Recently, the U.S. Senate passed a bill that would allow the removal of ‘rogue’ Chinese companies from U.S. stock exchanges, it will be interesting to see if Canaan is affected by that bill.

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