C3.ai (AI) shares took a nosedive on Thursday, December 10, 2024, following the company's fiscal first-quarter results and guidance for the current quarter. The stock plummeted by 14%, extending its year-to-date losses and dropping to near levels last seen in 2023. Several Wall Street analysts cut price targets after the results, citing the higher-than-expected loss, disappointing subscription revenue growth, and unchanged full-year projections. The consensus recommendation on the shares is currently a hold.



C3.ai reported revenue of $87.2 million for the fiscal first quarter, slightly above the analyst consensus of $87.0 million compiled by Visible Alpha. However, the company's net loss of $62.8 million was smaller than the expected loss of $65.0 million. For the current quarter, C3.ai projected revenue within a range of $88.6 million to $93.6 million, compared to the analyst consensus of $91.0 million. The company also projected an adjusted net loss of $26.7 million to $34.7 million, which was wider than the expected loss of $20.3 million.



KeyBanc analyst Eric Heath downgraded C3.ai's stock from sector weight to underweight, effectively changing the recommendation from hold to sell. Heath highlighted that C3.ai's stock is overvalued, with a price-to-sales ratio of 13.3 times annual sales, nearly twice the average valuation of its AI peers (7.3 times sales). Heath also warned that consensus forecasts for C3.ai's sales in fiscal 2026 and 2027 may be too high, considering that subscription revenue growth excluding upfront license has moderated to -1% year over year in the fiscal second quarter.

C3.ai's strategic initiatives and strong financial performance have driven the stock's bullish movement in recent months. However, the company's slowing revenue growth, ongoing losses, and shift in business model have raised concerns among investors. The AI sector's intense competition and potential regulatory challenges have also contributed to the stock's decline.

In conclusion, C3.ai's shares plummeted on Thursday due to a combination of factors, including the higher-than-expected loss, disappointing subscription revenue growth, and unchanged full-year projections. The company's slowing revenue growth, ongoing losses, and shift in business model have raised concerns among investors, contributing to the stock's decline. Despite the recent setback, C3.ai remains well-positioned to capitalize on its market potential as it improves its monetization opportunities. Investors should carefully consider the company's prospects and the broader market sentiment before making investment decisions.