Cerebras Short Sellers Capped Rally for 2026's Biggest IPO
$Cerebras Systems(CBRS)$ short sellers piled in as the stock of $NVIDIA(NVDA)$
The stock initially jumped as much as 200% Thursday during its trading debut. Short sellers immediately moved to bet against the rally by selling borrowed shares they did not own. This activity totaled 6.95 million shares on the first day, accounting for about 21% of all trading volume according to market data published on May 14.
Bearish investors pointed to a massive "concentration risk" detailed in the company's S-1 registration statement filed with the Securities and Exchange Commission. The United Arab Emirates-based firm G42 and its affiliates, accounted for 85% of the company's total revenue in 2025 according to that filing.
Concentration risk describes a situation where a business relies too heavily on one client for its income. If that one client stops buying products, the company's entire financial health could collapse overnight.
Skeptics also highlight the company's small revenue base compared to its massive market valuation. Cerebras reported just $171.4 million in total revenue for the 2025 fiscal year according to its SEC registration documents. That's a tiny fraction of Nvidia's $215.9 billion revenue, and AMD's $34.6 billion.
Short selling is a strategy where traders sell stock they do not own to profit if the price falls later. High short volume indicates that professional traders believe a stock has become too expensive too quickly and may be due for a drop. By the time the market closed Thursday, the stock trimmed its gains to just 68%, closing at $311.07, compared with the IPO price of $185.
The heavy selling pressure by these traders likely capped the gains as the stock reached an intraday high of $386.34. This level acted as a ceiling because short sellers flooded the market with supply just as retail investors were trying to buy.
Despite the skepticism, the company's bull case is built on its claim of owning the "world's fastest commercialized AI processor." The filing states the company's processor called Wafer-Scale Engine (WSE) is 58 times larger than Nvidia's B200 chip and has 2,625 times more memory bandwidth than Nvidia's B200 package, which contains two individual chips.
Cerebras also disclosed a potential $20 billion agreement with OpenAI to provide massive amounts of computing power through 2028, according to the amended SEC filing published on May 13.
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