Why C3.ai sank 14.9% last month

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What happened

Shares of C3.ai (NYSE:IA) gained 26.2% in November, according to data from S&P Global Market Intelligence. The stock lost ground on selling pressures from growth-dependent software stocks and the release of a new succinct report.

Short-selling firm Spruce Point Capital published an analysis on C3.ai on February 16, indicating that it considered the artificial intelligence (AI) stock to have significant downsides. At the time of the report’s release, the short seller said he sees C3.ai potentially falling “as much as 40% to 50%,” pointing to a price range between $12.85 and $15.40.

Image source: Getty Images.

So what

Amid selling pressure affecting the broader market, the downside revision by Spruce Point Capital triggered significant bearish momentum for C3.ai stock. The report notes that the AI ​​specialist’s customer base is highly concentrated, with an energy technology company hugue baker accounting for more than 30% of sales. Spruce Point also stated that C3.ai has demonstrated a tendency to exaggerate its “customers, technology development cost, total addressable market size, market growth rate, market share, alliances and development cycle. sale to conclude agreements”.

Now what

C3.ai stock continued to fall in early March trading. The company’s stock price is down about 10.6% in the month so far.

AI card

AI data by YCharts

C3.ai released its third-quarter results on March 2, delivering sales and profit for the period that beat market expectations. Revenue rose 42% year over year to $69.8 million, and the company posted a non-GAAP (adjusted) loss per share of $0.07. Meanwhile, the average analyst estimate was for an adjusted loss per share of $0.26 on revenue of $67.16 million.

The company also raised its full-year revenue forecast to $252 million, a 38% increase from its previous target. Despite sales and earnings beats and higher full-year revenue forecasts, C3.ai stock lost ground after an initial post-earnings rise as negative analyst coverage arrived . German BankNeedham’s Patrick Colville and Needham’s Mike Cikos were among a group of analysts who significantly lowered their one-year price targets for the stock, and the downgrades added to recent selling pressures affecting the stock. of software.

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Keith Noonan has no position in the stocks mentioned. The Motley Fool owns and endorses C3.ai, Inc. The Motley Fool has a Disclosure Policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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