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C3.ai Earnings Recap: Shorts Rebuffed on Rosy Guidance

By:Thomas Westwater

The company posted revenue of $78.4 million, an 18% year-over-year growth rate, while customer engagement rose 80% from a year ago

  • C3.ai stock surged after upbeat third-quarter earnings.
  • The company’s revenue and full-year guidance impressed Wall Street.
  • AI is heavily shorted, which may help to fuel more upside.

C3.ai (AI), the enterprise AI application software company, delivered 2024 third-quarter fiscal results yesterday after market close. According to financial statements, C3 posted revenue of $78.4 million, representing an 18% year-over-year growth rate, beating guidance. Losses were also contained to only $26 million on a non-GAAP (generally accepted accounting principles) basis, and net loss per share was $0.13, beating Wall Street estimates. Customer engagement rose significantly, climbing 80% from a year ago.

CEO and chairman Thomas Siebel sounded optimistic, stating that the company’s first-mover position in enterprise artificial intelligence is paying off as interest in generative AI grows substantially. In a CNBC interview, Siebel said the company has spent 15 years preparing for this moment.

That appears to be paying off, with the stock price up nearly 25% today. That is the largest one-day percentage gain since May 2023. While the stock is far from record highs, investors likely have more upside on the horizon, given we are still in the infancy of GAI (generative artificial intelligence). The company’s full-year fiscal guidance reflects the upbeat outlook for the sector, with AI forecasting 2024 revenue guidance of $306 to $310 million. Analysts were slightly less optimistic, expecting guidance of about $305 million.

Trading AI after earnings

AI surged after earnings and, naturally, some volatility came out of the stock. However, AI remains a heavily shorted stock, which could help fuel further upside following the upbeat earnings, which could cause investors to ditch those short positions. AI is one of the most heavily shorted stocks on the New York Stock Exchange, with a float short percentage of 33.6%, according to finviz data. That makes it the fifth most-shorted stock on the exchange. It was also a tasty favorite AI stock for 2023.

According to the March 15 option expiration, the expected move is +/- 4.16 points, constituting a +10% move in either direction. If you believe the options market is underpricing the potential for a move of that size, you could play it directionally by selling a put or call spread. For example, a $2 wide short put vertical for March 15 at the 35 delta would give you a probability of profit (POP) of 64%, with a max profit of 68 and a max loss of 132.


Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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