Kerrisdale Capital short C3.ai on ‘poor customer traction,’ financial pressures

Kerridale Capital said in a recently published report that it is short shares of C3.ai, a $4 billion market capitalization enterprise software company that has risen from the ashes of its busted IPO based on the misconception that its selfproclaimed ‘AI leadership’ somehow positions it to benefit from Silicon Valley’s current tech theme du jour: generative AI as represented by media obsession ChatGPT. We believe these speculative flames won’t burn bright much longer, as the realities of C3’s poor customer traction, failing sales partnerships, and financial pressures will catalyze what is likely to be a painful reality check." "C3.ai isn’t merely overvalued – it’s most likely worthless. Burning $200m+ cash a year, with an additional $200m+ of stock compensation expense, on less than $300m of revenue, the company hasn’t demonstrated an ability to provide an attractive solution that enough customers want, need or find competitive relative to alternatives. Its products don’t solve business problems in ways that are sufficiently valuable for enough customers, or scalable and profitable enough for C3. The result of this poor product solution set is dumpster fire financial statements. Revenue and gross profit are declining, while cash burn is accelerating. Customer concentration is massive, even as C3’s largest customer relationship with Baker Hughes (BKR) is crumbling," the report reads. Shares of C3.ai have dropped almost 3% to $27.71 in Monday morning trading.