C3.AI Deep Dive + Long Hold? (For Followers) (Happy Mothers Day!)
First, I would like to thank everyone for their support on my last Deep Dive! Your feedback and comments were awesome to read and they have inspired me to make another Deep Dive. Also, Happy Mothers Day! If you are a mother out there, cheers to you and I hope you have a great day.
I think I might make a Medium page for my ideas to refer back to all my Deep Dives. I am going to keep these public and free to access for my followers during this time since I really enjoy making these posts for myself and others. Will I monetize it someday? Who knows, I haven't thought that far ahead yet, nor do I think my content is up to that standard but I enjoy working hard. Enough about that, let's get right into it.
(Part 1: History)
(Notice: I will be referring to C3.AI as C3.AI or C3 in this article)
C3.AI Historical Financials
C3.AI was originally launched in 2009 by Tom Siebel, who started and ended up selling the Siebel Systems, a customer relationship software firm, to Oracle early on in 2006 for 6 Billion dollars. In 2009, C3.AI was set to initially provide cloud based AI tools to different energy companies. Those, and more, companies sought to do business with C3 in order to streamline operations, cut costs and support data driven decisions within their respective companies. C3 was originally thought by analysts to have a lighthouse strategy where they would create contracts within different waters in order to attract a sea of investors from numerous sectors to their company.
(Think about a lighthouse strategy like this. You own, say, a painting company. You want to attract customers, so you start contracts out with families. One of those families is bound to know someone who owns a larger corporation, or maybe they even own their own company. The hope is, by doing a good enough job through innovation and philanthropy, you are able to demonstrate the value of your company to attract other clients, companies, or in the case of the market, investors. If all goes well, different clients will catch wind about the great output you provide, along with customer satisfaction, and now a sea of new clients are docking at the shores of your company. By positioning yourself amongst the eyes of other sailors, or organizations, you will begin to establish frequent customers, or visitors, who wish to learn more or do business with you. In the case of C3: 3M, Royal Dutch Shell, and the US Airforce all anchored down at the C3 lighthouse.)
(This is a VERY brief explanation of a lighthouse strategy which I hope I was able to decode and put into an example for my followers and readers of this article)
C3.AI IPO
I. The year is 2020, the pandemic is in full swing, all the while the money printer is raging against the machine leaving investors skeptical, but ready to decide which companies to invest in. Just when skepticism was at its highest, C3 goes live. Filing S-1 for IPO, C3 completed its forums with the SEC on Friday valued at 3.3 Billion (USD) at the time, resulting in C3's inauguration into the New York Stock Exchange at $42 on Wednesday, December 9th 2020.
Although trading at around $100, C3 closed 8 dollars down on the day. The company had some real gas behind it. Despite being unprofitable. they could not have chosen a better time to IPO! With the money printer fully functional and the Santa Clause rally hyping up investors, C3 recovered in the days to follow creating its first higher high on the NYSE at $179-180. At the time, C3 sat at #68 on Forbes' Cloud 100 list in 2020.
Check Forbes Here: C3.ai | Company Overview & News
(TLDR: C3 had a great IPO)
Investors are curious?
II. C3's reputation, similar to Palantir's, was rocketing with the US Defense awarding a $95 Million Dollar contract vehicle to improve readiness using Ai on January 15th (Stock closed 8 dollars down from 142 to 134). C3 Analysts remarked, "On January 15, 2020, Tom Siebel joined Bloomberg Technology's Taylor Riggs to discuss C3.ai's latest $95M contract with the U.S. Department of Defense and the company's work using AI-based applications to increase the readiness and availability of military aircraft. He also shared his views on our country's vulnerability to cyberattacks" (Bloomberg TV, Tom Siebel (c3.ai)).
Why did the market, which was was clearly expressing optimism in the new advancements with the military, remain undecided? Well, because of insider acquisitions and earnings season which C3, in the following days, formed it's second higher high.
You can read the SEC documents here: SEC Filings - C3.ai, Inc.
C3 seemed like a great buy, with contracts being secured from The Pentagon, C3 was securing a multitude of government contracts which boosted investor sentiment. Until investors remembered they are unprofitable where Wednesday, February 10th began the C3's first lower high in the $100 range which it has not seen since.
C3 Perspective 1 (Daily)
C3 Perspective 2 (Daily)
Perspective 3 (Daily)
What happened?
III. On February 10th, 2021, C3 announced they would "release its financial results for the third quarter of fiscal year 2021, which ended January 31, 2021". Okay? Regardless, their earnings would come out on March 1st 2021 after hours New York Time.
However, on that exact day the Bureau of Labor Statistics was set to report the Consumer Price Index at 8:30AM New York.
You can read what happened here: bls.gov/news.re...
The market took a hit.
Tesla:
Spy:
C3.AI:
C3, being known as unprofitable, went lower with the January 2021 CPI.
Earnings
IV.
C3 was profitable! Sort of...
With overall revenue and gross margins increasing, C3 was on a hot streak. However, their loss from operations was far too much and not what analysts and investors hoped for. This led to guidance being interpreted as negative, causing C3 to drop in price.
(Part 2: Current)
I. Since C3's pump, it has seen considerable stabling.
The chart seems to flatline and descend through each earnings which ended up being alright, but nothing that would spark investor attention as seen during the months close to IPO.
C3 currently sits at 19.340 after hours and closed most recently at 19.420.
Possible Cup and Handle on Daily
There is room for more downside as the upside trend is very weak.
Thoughts
I. Ai, Ai, Ai, Ai, Ai. Google's stock ballooned with the mentioning of Ai. investors speculated that C3 initially ran to the upside with the recent 2023 "Ai" wave where if you talk about Ai in your stock then it will go up in price. As for C3, Ai is in it's name. This alone should not be a reason to invest just because Ai is in the name, but to reiderate the most recent earnings were not fantastic. Ai is down from it's IPO and higher high which has investors worried whether the company will actually be profitable.
C3 has AI in on the title of their home page along with the mention of Generative Ai for Enterprise. This is incredibly attractive to investors.
C3 has a lot of projects already underway.
C3 has customers as well who provide updates on their products.
C3 does business with numerous Fortune 500 companies.
II. Pump and Dump. Early on investors were able to see the impact of ChatGPT, unfortunately they suffured from losses since the ChatGPT / AI wave did not start until this year. However, if you are a new investor or are thinking about taking a position into an AI company, now is absolutely the time (Not financial advice at all and there are a ton of AI companies out there. Analystis do not consider C3 as an AI pioneer). NVIDIA is speculated to be the leader of AI right now, but C3 could gain traction. However, C3 has yet to produce any remarkable results.
III. The Current Economy. As mentioned in my last Deep Dive, I expressed a strong liking of PLTR. However, there is a lot of uncertainty in the market / US economy. C3 may see some more recent downside and the cup and handle may not fill. The picture from MooMoo I added suggests a possible descending wedge which is not completed or formed yet on the day so be careful when trading this stock on technicals. How you choose to invest with C3 is up to you.
IV. Jerome Powell. As mentioned with PLTR, any mention of a cut (although which may actually be bad) or pause will have an impact on the market. The speculated default date of June 1st is coming up so any positive news will be great for the market. Trade cautiously.
Tinfoil
I. War. Tinfoil is conspiracy that has almost no backing to it but here are my thoughts. C3 has numerous military contracts, they may end up benefiting from a new world war. No one wants war, and I am in no way am hoping for war of any way. However, C3 may be a hedge against war. I personally do not strongly think of the company in this way but its another thought I have.
News
There is other news as well from the company here: News - C3.ai, Inc.
Strongest Take
I. Local. C3 does not have strong foreign presence. It may very well be priced in at $20 due to this. The original IPO of $43 may be seen as overextended by investors which is why it declined, ultimately no one thought of it as a stock without potential. Holding at this price may be a good play. As a disclaimer, I have bought C3 before and have once held options to the upside and downside in the short term. This article is unbiased, but if I had to choose from buy or sell I think longing the stock is the better play. You may lose money, so do trade accordingly to your own personal strategy. This is not financial advice.
Conclusion
I. C3.AI. Overall, C3 is a great company, on paper. Whether or not they will turn a noticeable or outstanding profit has yet to be seen. I think there is an equal amount of risk to reward here and it could be worth a hold. Not financial advice. This is my opinion from my research, do your own and trade according to that with your financial advisor.
II. ChatGPT. Tom Siebel is not a fan of the ChatGPT rally. You can read more here: Here's what C3.ai's CEO Tom Siebel says about company's ChatGPT-fueled stock jump
III. Should you invest in C3.Ai. That is entirely up to you. In this post, nothing should be seen as financial advice or be taken as a "you should buy" or "this stock will go up", because you definitely may lose money along the way. Trade at your own risk, understand what you are getting into and make a decision based on your own personal goals, finances, and whatever else you base your trades on. None of what I say should influence you, that's not my intent.
To be clear, my intentions are looking at the finances, history, and current trends to try and assess why C3 may be a long hold. I could be entirely wrong, so do your own research. There could be other reasons why C3 could go up, down or remains steady at the current price, but for now these are my thoughts and ideas into C3.AI. How you choose to act, and perceive this information including future profits and losses is entirely up to you.
I hope you find this information informative and consistant. Again, thank you for all the support in the last Deep Dive I did about Palantir. I hope to make more of these soon!
I usually leave these posts for my followers, but in the next trading days I may add some tags to it because I think I have worked hard on this. Thank you so much for the inspiration, and I look forward to making the next one.
Palantir article can be found here: PLTR Deep Dive and Cathie Wood (For Followers)
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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