Why C3.ai Plunged in August

Key Points

• C3.ai pre-announced a terrible quarter on Aug. 8.

• Additionally, its CEO and founder is having health problems.

• The company appointed a new CEO in September and has also revamped its sales force. But uncertainty remains.

• 10 stocks we like better than C3.ai ›

Shares of AI software company C3.ai (NYSE: AI) sank in August, falling 28.2% during the month, according to data from S&P Global Market Intelligence.

C3.ai pre-announced its fiscal first-quarter results, disclosing that it would miss its initial guidance by a whopping 30%. Needless to say, the market didn’t take too kindly to the news.

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C3.ai misses badly and faces uncertainty going forward with a new CEO

On Aug. 8, C3.ai pre-announced that its fiscal first-quarter revenue would only be about $70.3 million, with adjusted (non-GAAP) operating losses of roughly negative $57.8 million. That’s a massive miss, considering initial guidance for the quarter was about $104.5 million in revenue and negative $28.5 million in adjusted operating losses at the midpoint.

C3.ai Chairman and now former CEO Thomas Siebel noted he had been having some health issues that prevented him from being present at sales meetings, and that he had underestimated the impact of his absence in closing deals.

As a result, C3.ai revamped its sales organization, announcing four new hires and one promotion in its sales organization. Subsequently in September, when C3.ai eventually did report earnings, the company also announced Stephen Ehikian as its new CEO, while Siebel will remain as executive chairman.

Image source: Getty Images.

Down 55% this year, is a turnaround possible?

With a miss that big and now a new CEO, it’s no wonder C3.ai is down a whopping 55% on the year.

The good news is that the company still has a rock-solid balance sheet, with $711 million in cash and no debt. Furthermore, the company’s new CEO is a software entrepreneur who has previously sold two AI-focused software companies to Salesforce (NYSE: CRM).

So, C3.ai investors aren’t without hope. Yet with a big miss on the quarter and continued operating losses, it’s hard for investors to get their heads around C3.ai’s prospects, which have been disappointing to say the least, despite the rise of generative AI. With so much in flux, this remains a situation to watch from the sidelines for now.

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce. The Motley Fool recommends C3.ai. 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.