C3.ai (AI) has declined significantly in recent weeks, and the selloff has accelerated due to the company missing earnings. CEO Thomas Siebel called these results “completely unacceptable”.
Previously on MoneyMorning, I discussed Siebel’s pre-planned sales of AI stock back in April and said that shaving off some holdings would be the best idea here.
However, the recent disappointment wasn’t due to the broader market undergoing more cooling, as I had initially expected. Instead, C3.ai has failed to lift itself despite the AI tailwinds.
C3.ai’s disappointing preliminary earnings figures
C3.ai reported expected revenue of $70.2 million to $70.4 million, down 19% year-over-year from $87.2 million in the year-ago quarter. This was well below the company’s own guidance midpoint of $104.5 million.
Siebel said his health was partially to blame for these results, as he could not focus on growing sales while undergoing multiple hospitalizations and an ongoing vision impairment. As such, he will be stepping down from his position as CEO once a replacement is found.
These earnings results were immediately followed by a slew of analyst downgrades.
AI stock is now a strong sell
C3.ai could have used the market euphoria to build up a significant cash reserve through at-the-market offerings. Management has ended up missing that window, and the current price gives it much less leeway to improve on the cash front.
This makes it one of the worst AI startups to put your money into. Not only is the cash runway small, but the financials are worsening. Other AI companies have used the stock market rally to proactively issue shares and improve their balance sheet.
I believe more pain is ahead as cash runs out, likely leading to more aggressive dilution.
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