Thinking of Buying C3.ai Stock? 2 Things You Absolutely Cannot Ignore
C3.ai (NYSE: AI) seems to be making a strong case for being the biggest battleground stock of the year. Share prices of the company, which bills itself as a software-as-a-service provider of artificial intelligence (AI) platforms, have surged thanks to a tidal wave of interest in AI. The stock even tripled in value at one point this year.
However, C3.ai is not without its risks. This "growth" stock actually posted a revenue decline in its most recent quarter, as well as a wide loss. The company is shifting its business model to a consumption-based one, rather than a subscription-based one, and its valuation is also steep, with a price-to-sales ratio of 10.
The biggest battleground to open occurred when short-seller Kerrisdale Capital laid out its case against the AI stock earlier this month. The research firm alleges that C3.ai was booking fictional revenue and that it's more of a consulting business than a software company. The accusations convinced enough investors to sell that it wiped out roughly 40% of the stock price in the days that followed the report's release. The stock has since recouped some of those losses after the company dismissed the attack, arguing that Kerrisdale demonstrated a fundamental misunderstanding of generally accepted accounting principles (GAAP).
Source Fool.com
