C3.ai: Off To Moon, Shall We?

Seekingalpha2023-03-03

SummaryC3.ai soars as investors charged into the stock. That's the headline, right? Perhaps, what's actually happened is that the shorts got too crowded.C3.ai changes its business model to usage-based...

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Comments

Tanyl
2023-03-03
Tanyl
Need some time
HLPA
2023-03-03
HLPA
C C3.ai is not connected to ChatGPT mind you. The company is a loss making one. This is a casino stock, beware! I was burned long ago and lost huge.
- UPssss:
  You must be late to the party. TO THE MOOON!
- chonglikguo:
  Just hoot everything with AI, bet 10 get 1 Golden Goose
June_C
2023-03-03
June_C
Great
EKT
2023-03-03
EKT
Share your opinion about this news…
- UPssss:
  My Opinion is TO THE MOOOOOOOOOON‌[财迷] ‌

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That's the headline, right? Perhaps, what's actually happened is that the shorts got too crowded.C3.ai changes its business model to usage-based...</p>\n\n<a href=\"https://seekingalpha.com/article/4584243-c3ai-off-to-moon-shall-we\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"AI","symbol_name":"C3.ai, Inc.","start_time":0,"source_url":"https://seekingalpha.com/article/4584243-c3ai-off-to-moon-shall-we","article_id":"1195453321","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1195453321","pubTimestamp":1677848542,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"SummaryC3.ai soars as investors charged into the stock. That's the headline, right? Perhaps, what's ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AI":"C3.ai, Inc."},"translate_title":"C 3。艾：去月球，好吗？","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AI":0.9},"content_text":"SummaryC3.ai soars as investors charged into the stock. That's the headline, right? Perhaps, what's actually happened is that the shorts got too crowded.C3.ai changes its business model to usage-based business model. What does this mean in practical terms?Despite all the excitement around AI, C3.ai's customer count is flat since last quarter.Investment ThesisC3.ai put out a strong outlook that got animal spirits back into the stock. With the stock soaring premarket, there's undoubtedly a lot of excitement in this name.And while I don't wish to destroy anyone's fun, and I will not make any comments on its valuation, I do wish to pepper investors' enthusiasm with a few notes of caution.I believe that in the long run, this will end badly. But at the same time, I'm experienced enough (or better said, been humbled enough times) to know that the market can remain irrational for a while.Let's get into it.C3.ai beat on the top and bottom line and put out above-consensus revenue guidance.But I won't delve further into its outlook, as I believe that is less interesting than what's happening in the background.Where Short Sellers Caught Off Guard?Spruce Point Capital Management is short the stock. In their short report, one of the things they declare is that C3.ai has a history of changing its name as trends change.At first, the company was called C3 Energy, when energy was hot. Then, it changes its name to C3 IoT, when IoT was the significant buzz theme of the day.And now, more recently, the company changed its name to C3.ai. See the chart below that overlays the ''topic du jour'' with the company changing its name.Meanwhile, as we headed into C3.ai's fiscal Q3 2023 earnings result, shorts came out on mass looking to short this stock into the earnings report.But what the shorts didn't count on was this:In the course of the quarter, we validated our transition to a consumption-based pricing model.Our pilot to production conversion rate is on track. The consumption pricing revenue conversion model that we provided last quarter [...], appears to be realistic, suggesting substantially increasing revenue growth rates in fiscal year '24 and beyond.These comments came from C3.ai's Chairman Tom Siebel on the earnings call. Now, I'm going to rewind the clock and talk about consumption-business models.The graphic above shows 4 different companies that embraced a usage or consumption-business model.These business models are absolutely fantastic to drive up near-term revenues. Do you know why?Because the more you use the platforms the more you are billed. Do you think that you'd be willing to pay more to Netflix (NFLX) if you decided to watch two shows instead of one? Maybe. Let's ask Blockbuster how that turned out.What you want is for your customers to maximize their time on your platform. Not to put forward barriers that make them wish they didn't end up with such a high bill.It would be the same as Amazon (AMZN) ramping up shipping costs every time you bought something from them. It would be foolish at best.In sum, I have yet to find a single business that successfully employs a usage-based business model.Is C3.ai Mostly Wall Street Hype?C3.ai ended last quarter, fiscal Q2 2023 with 236 customers. And now? C3.ai ended fiscal Q3 2023 with 236 customers. No growth in customers. If you are not growing your customers, the driving engine of your business, then you don't have a growth business.For their part, C3.ai discussed on the earnings call, that there are 17 customers running a trial, that C3.ai is looking to onboard. Investors should watch this space for further updates. And if more customers started to get onboarded, that could reignite C3.ai's growth opportunity.The Bottom LineWhen the Fed takes its foot off the brakes, this will be a cash positive rapidly growing business, okay? And I think we're going to be off to the races. (Chairman Tom Siebel comments)C3.ai's balance sheet holds more than $750 million in cash and equivalents. So, even though C3.ai is likely to burn through more than $250 million of free cash flow this fiscal year, C3.ai asserts that by the end of fiscal 2024, the next twelve months, C3.ai will be cash positive.In summary, AI remains a very exciting place to watch.","kind":"news","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9940639260,"gmtCreate":1677853860550,"gmtModify":1677853864585,"author":{"id":"4087109808120260","authorId":"4087109808120260","name":"Tanyl","avatar":"https://static.tigerbbs.com/174329973340cf0f5b68791ee5b08afd","vip":1,"crmLevel":9,"crmLevelSwitch":1,"idStr":"4087109808120260","authorIdStr":"4087109808120260"},"htmlText":"Need some time","listText":"Need some time","text":"Need some time","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9940639260","repostId":1195453321,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9940692771,"gmtCreate":1677852023593,"gmtModify":1677852928232,"author":{"id":"3569274903458035","authorId":"3569274903458035","name":"HLPA","avatar":"https://static.tigerbbs.com/07e7b987a9127c5a47dbc3ae02db548b","vip":1,"hat":"https://static.tigerbbs.com/646756f1284a5a6480ed02cc4fa7d1d2","crmLevel":8,"crmLevelSwitch":1,"idStr":"3569274903458035","authorIdStr":"3569274903458035"},"htmlText":"C C3.ai is not connected to ChatGPT mind you. The company is a loss making one. This is a casino stock, beware! I was burned long ago and lost huge.","listText":"C C3.ai is not connected to ChatGPT mind you. The company is a loss making one. This is a casino stock, beware! I was burned long ago and lost huge.","text":"C C3.ai is not connected to ChatGPT mind you. The company is a loss making one. This is a casino stock, beware! I was burned long ago and lost huge.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/9940692771","repostId":1195453321,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":105941847,"gmtCreate":1677860785043,"gmtModify":1677860788308,"authorId":4093933772011110,"author":{"id":4093933772011110,"idStr":"4093933772011110","authorId":4093933772011110,"name":"UPssss","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9940692771,"type":1,"supId":0,"prevId":0,"content":"<p>You must be late to the party. TO THE MOOON!</p>","text":"<p>You must be late to the party. TO THE MOOON!</p>","html":"<p>You must be late to the party. TO THE MOOON!</p>"},{"id":105940548,"gmtCreate":1677854677594,"gmtModify":1677854690318,"authorId":3586700132013602,"author":{"id":3586700132013602,"idStr":"3586700132013602","authorId":3586700132013602,"name":"chonglikguo","avatar":"https://static.itradeup.com/news/d1e40a00dd84dbabc4f8e3a748f86fb6","vip":1,"currentWearingBadge":{"badgeId":"44212b71d0be4ec88898348dbe882e03-3","templateUuid":"44212b71d0be4ec88898348dbe882e03","name":"President Tiger","description":"The transaction amount of the securities account reaches $1,000,000","bigImgUrl":"https://static.tigerbbs.com/fbeac6bb240db7da8b972e5183d050ba","smallImgUrl":"https://static.tigerbbs.com/436cdf80292b99f0a992e78750ac4e3a","grayImgUrl":"https://static.tigerbbs.com/506a259a7b456f037592c3b23c779599","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2023.07.14","exceedPercentage":"93.06%","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1101},"crmLevel":3,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9940692771,"type":1,"supId":0,"prevId":0,"content":"Just hoot everything with AI, bet 10 get 1 Golden <u>Goose</u>","text":"Just hoot everything with AI, bet 10 get 1 Golden <u>Goose</u>","html":"Just hoot everything with AI, bet 10 get 1 Golden <u>Goose</u>"}],"langContent":"EN"},{"id":9940692377,"gmtCreate":1677851787599,"gmtModify":1677851789367,"author":{"id":"3574813964437135","authorId":"3574813964437135","name":"June_C","avatar":"https://static.tigerbbs.com/ae77017e1795eeceab087663e5586137","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3574813964437135","authorIdStr":"3574813964437135"},"htmlText":"Great","listText":"Great","text":"Great","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9940692377","repostId":1195453321,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9940690923,"gmtCreate":1677849611163,"gmtModify":1677849614646,"author":{"id":"3569624208133637","authorId":"3569624208133637","name":"EKT","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3569624208133637","authorIdStr":"3569624208133637"},"htmlText":"Share your opinion about this news…","listText":"Share your opinion about this news…","text":"Share your opinion about this news…","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/9940690923","repostId":1195453321,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":105939673,"gmtCreate":1677850374623,"gmtModify":1677850378023,"authorId":4093933772011110,"author":{"id":4093933772011110,"idStr":"4093933772011110","authorId":4093933772011110,"name":"UPssss","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9940690923,"type":1,"supId":0,"prevId":0,"content":"<p>My Opinion is TO THE MOOOOOOOOOON‌<a href=\"\" class=\"immutable-element immutable-text\">[财迷]&nbsp;</a>‌</p>","text":"<p>My Opinion is TO THE MOOOOOOOOOON‌<a href=\"\" class=\"immutable-element immutable-text\">[财迷]&nbsp;</a>‌</p>","html":"<p>My Opinion is TO THE MOOOOOOOOOON‌<a href=\"\" class=\"immutable-element immutable-text\">[财迷]&nbsp;</a>‌</p>"}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":40,"commentSize":4,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1195453321"}