COAI's Steep Price Decline: The Battle Between Core Market Values and Speculative Frenzy in the AI Industry

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COAI's Steep Price Decline: The Battle Between Core Market Values and Speculative Frenzy in the AI Industry

Bitget-RWA2025/11/14 04:08

By:Bitget-RWA

- Canaan Inc. (COAI) stock plummeted 88% YTD, reflecting AI/crypto sectors' struggle to balance speculative hype with fundamentals. - Company raised $7.8M via ATM, launched energy-efficient A16 miner, and maintains 1,582 BTC/2,830 ETH treasury despite liquidity challenges. - Short-sellers profited $3.125M while pending CLARITY Act and C3.ai's 54% YTD decline highlight regulatory risks and valuation gaps. - S&P 500's 22.8x forward P/E vs. SoundHound AI's 27.84x P/S ratio underscores sector's uneven valuatio

The dramatic 88% drop in

Canaan Inc.

(COAI) shares so far this year has sparked intense discussion about the ongoing difficulties in the AI and cryptocurrency industries, as both try to balance speculative excitement with real-world performance. While some of this decline is tied to issues unique to the company, it also signals a broader market adjustment as investors move away from hype and focus more on profits and regulatory transparency.

The Fundamentals: A Company in Transition

Canaan Inc., a significant provider of

bitcoin

mining equipment, has made efforts to strengthen its finances. In October 2025, the firm

secured $7.8 million via an at-the-market (ATM) equity sale

and halted additional offerings, indicating a move to conserve cash. The company’s financial health remains solid, with a current ratio of 1.78 and

a crypto reserve of 1,582 bitcoins and 2,830 ETH as of September 30

. On top of that,

Canaan introduced its Avalon A16 mining rig

, which achieves 300 terahash per second at 12.8 joules per terahash, making it competitive in a market increasingly focused on energy efficiency.

Benchmark Capital increased its price target to $4.00

, pointing to better compliance with Nasdaq rules and positive business trends.

COAI's Steep Price Decline: The Battle Between Core Market Values and Speculative Frenzy in the AI Industry image 0

The Speculative Hype: Short-Sellers and Regulatory Uncertainty

However, these solid fundamentals have not been enough to stop the wave of speculative selling.

A Binance trader reportedly earned $3.125 million

by strategically shorting the stock. Ongoing uncertainty about regulations, especially regarding the upcoming Digital Asset Market Clarity Act (CLARITY Act), has added to the instability,

placing AI-driven crypto initiatives in a regulatory gray zone

. The AI sector as a whole has also faced a reality check.

C3.ai, once a highly touted enterprise AI software company

, experienced a 54% drop in its stock price this year, alongside a 19% fall in revenue and a net loss of $116.8 million in the first quarter of fiscal 2025. These setbacks have affected related stocks, including COAI, as investors become more cautious.

Sector Valuation: A Tale of Two P/E Ratios

Valuation figures in the AI industry highlight this divide. By the third quarter of 2025,

the S&P 500’s forward price-to-earnings ratio reached 22.8x

, significantly higher than its 30-year average of 17x, showing that investor optimism is concentrated in a handful of major tech firms. In comparison, companies such as SoundHound AI are valued at a forward price-to-sales ratio of 27.84—much higher than the sector average of 16.65—

illustrating the uneven nature of the industry

. Meanwhile, C3.ai’s difficulties highlight the risks of high valuations without corresponding profit growth.

Conclusion: A Sector at a Crossroads

Canaan’s situation reflects the larger challenges facing both the AI and crypto markets. While the company’s innovation and strong liquidity suggest it could weather the storm in the long run, the current market is dominated by concerns over regulation and short-term gains, which have overshadowed its strengths. For investors, the takeaway is clear: the period of unchecked speculation is ending, replaced by a more cautious, earnings-focused mindset. Those who can balance careful analysis of fundamentals with awareness of regulatory and market risks may discover opportunities as the sector eventually stabilizes.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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