THE STOCK OF 2022 WILL BE......
C3.ai: A damaged IPO
Shares of C3.ai have been demolished since its IPO in late 2020, but it is far from down and out. After the IPO hype wore off, shares of C3.ai,
which offers AI as a service,sunk over 70%.
C3's AI software uses predictive analytics to further application development and efficiency. The company offers its services to businesses that might not want to produce this technology in-house, or might not be able to. It serves oil and industrial companies, many of which probably won't attract the best AI developers in the labor market.
The company's quarter ending July 31 (its 2022 first quarter) had revenue growth of 29% to $52 million and customer growth of 85% to 98 customers. Its gross margin rose from 74% one year ago to 75% in its first quarter, but its sales and marketing expenses jumped more than 155% to $36.8 million. This resulted in a net loss of $37 million, compared to the year-ago quarter's break-even status.
C3.ai now trades at 22 times sales, which is more reasonable than the 80 multiple from the beginning of this year. The company has immense network effects as a result of obtaining more data from an increasing amount of customers. And that, in turn, makes its AI software more effective for the next customer. This gives me confidence that C3.ai will become increasingly valuable to its customers, propelling its revenue and customer count. Despite its drastic fall this year, C3.ai's potential is immense, and I think the company has a chance of catching up to its IPO price in 2022.
VAN--- !