C3.AI Stock Crashes After Alarming Results, Forecast: Retail Investors See Worst-Case Scenario, Speculate Buyout

The enterprise AI company reported Q3 results and forecast Q4 sales significantly below expectations.

• C3 stock plunged 22% in Wednesday’s after-market session.
• “This is an implosion,” says a retail investor.
• C3 is undergoing a restructuring under a new chief executive and has rolled out a plan targeting $135 million in annual cost savings.

C3.ai, Inc. shares tumbled 22% in after-hours trading on Wednesday after the company delivered underwhelming quarterly results and guidance, alongside plans to cut 26% of its workforce – developments that prompted some retail investors to float worst-case scenarios.

Traders debated whether the dramatic drop signaled a bottom or a "falling knife" scenario, with many considering puts, while others eyed potential bounces.

“$AI great ticker symbol, trash company,” remarked one user, while another said in a lighter vein that it might become the first AI company to go bankrupt.

“I'm bullish long-term, but this is an implosion,” said another user. “Their revenues have been cut in half yoy. This will take a huge beating before they recover.” On the other hand, a few expected the stock to rebound and the new management to deliver turnaround results.

Overall retail sentiment for C3 stock climbed to ‘bullish’ from ‘neutral,’ according to Stocktwits data. 

AI Stock Under Pressure

C3.ai shares have been under pressure of late amid an ongoing restructuring under new CEO Stephen Ehikian, who took over in September. The stock fell 60% last year and is down 23% already this year. If Wednesday’s after-market move holds in Thursday’s session, it would be the stock’s worst performance since August. 

New CEO Undertakes Restructuring

"It was clear to me that we were not organized appropriately. We've reduced our cost structure and cash burn. We've restructured and flattened the sales organization," Ehikian said in a statement on Wednesday, adding that the company has accelerated product development and plugged AI across business functions.

The management noted progress on a new restructuring plan, which it said will deliver annual cost savings of about $135 million.

Downbeat Results, Forecast Spark Concerns

The remarks did little to shore up market sentiment following financial results that fell well short of expectations.

Revenue in the fiscal third-quarter, which ended last month, fell 46% to $53.3 million, compared to analysts’ expectations of $75.91 million. Net loss increased 66% to $133.3 million.

On an adjusted basis, the loss was $0.40 per share, compared to expectations of $0.29. Fourth-quarter sales guidance, with a midpoint of $50 million, was also significantly below analysts’ target of $77.7 million. 

C3.ai Merger Speculation?

Some retail traders speculated that C3 might be heading towards a buyout, with Automation Anywhere’s name floating as a potential acquirer. The Information last month reported early merger talks between the two companies, based on sources. 

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