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C3.AI meme
(“SpongeBob SquarePants”)

The company with the world’s most enviable stock ticker isn’t cashing in on AI

When your ticker is “AI,” people expect you to be riding the wave better than anyone else — but that hasn’t happened for C3.ai.

Hyunsoo Rim

Executives in Corporate America are bending over backward to describe their products as “AI-powered” or “AI-driven,” desperate to join the hype train. Weirdly, the stock with the enviable “AI” ticker is going the opposite way.

C3.ai, a 16-year-old enterprise software firm that develops AI tools for businesses and government use, has fallen 34% in the past month — hit first by a weak preliminary forecast in August, followed by actual quarterly results on Wednesday, which founder Tom Siebel described as “completely unacceptable.”

For the quarter ended July 31, revenue fell 19% year over year to $70.3 million, missing forecasts by a mile; Wall Street was expecting somewhere north of $100 million, per Bloomberg. Losses, unsurprisingly, ballooned as well, with a net loss of nearly $117 million.

Indeed, since its 2020 IPO, the company has remained in the red, with losses continuing to widen.

C3.ai has rebranded several times since its founding in 2009: first as C3, focusing on carbon emissions tracking, then as C3 IoT in 2016 during the Internet of Things boom, and finally as C3.ai in 2019, pivoting to artificial intelligence. Shares popped after its IPO, but are now down ~90% from its peak, seriously missing the AI rally that’s defined the last two years.

Siebel blamed the weak quarter on the company’s disruptive sales overhaul, while also citing his own health issues. This week, the company appointed Stephen Ehikian as CEO, with Siebel staying on as executive chairman. Despite the miss, Siebel emphasized that C3.ai has an “extraordinarily large market opportunity, a superlative product offering, and exceptional levels of customer satisfaction.”

Still, analysts remain skeptical. Oppenheimer’s Timothy Horan warned the guidance may need to be reset lower, while Wedbush Securities’ Dan Ives called the last quarter “brutal” and cautioned of “darker days” if performance doesn’t improve. 

Of course, AI isn’t a magic word that turns hype into profit. Though the frenzy around the tech has produced big winners, with Nvidia surpassing $4 trillion in market cap and Palantir transforming into a corporate behemoth thanks to a strong retail following, other names like Marvell, Adobe, and Salesforce are facing setbacks as their AI push has yet to meaningfully boost their bottom lines.

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Matt Phillips

DraftKings moves to counter prediction market threat

DraftKings rose after hours, following news that it is buying Railbird in an effort to address the competitive threat from prediction markets that has weighed on its share price — and that of FanDuel parent Flutter Entertainment — for weeks.

The deal is then latest example of the increasing linkages and overlap between worlds of financial markets, gambling, and prediction markets.

Earlier this month, ICE — the parent company of the New York Stock Exchange and the ICE futures markets, among others — announced it would invest up to $2 billion in prediction markets company Polymarket.

And Robinhood shares have recently gotten a lift from its ongoing partnership with prediction market platform Kalshi, which has seen growing uptake of its events contracts that allow buyers to take positions on football games.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

By and large investor excitement over prediction markets — which has picked up since the start of football season — has seemed to come at the expense of Flutter and DraftKings, the two companies that dominate US sports betting.

Over the last three months through the end of regular trading on Wednesday, DraftKings and Flutter were down 23% and 18%, respectively, while the S&P 500 is up about 7%.

DraftKings acquires predictions platform Railbird

DraftKings acquires predictions platform Railbird

The deal is then latest example of the increasing linkages and overlap between worlds of financial markets, gambling, and prediction markets.

Earlier this month, ICE — the parent company of the New York Stock Exchange and the ICE futures markets, among others — announced it would invest up to $2 billion in prediction markets company Polymarket.

And Robinhood shares have recently gotten a lift from its ongoing partnership with prediction market platform Kalshi, which has seen growing uptake of its events contracts that allow buyers to take positions on football games.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

By and large investor excitement over prediction markets — which has picked up since the start of football season — has seemed to come at the expense of Flutter and DraftKings, the two companies that dominate US sports betting.

Over the last three months through the end of regular trading on Wednesday, DraftKings and Flutter were down 23% and 18%, respectively, while the S&P 500 is up about 7%.

Max Knoblauch
3h
As Netflix drops on earnings miss, it’s investing just $0.40 into content for every $1 of revenue

Netflix shares fell in after-hours trading on Tuesday, following the release of the streamer’s third-quarter earnings report.

The Hollywood sign and Netflix logo in LA
Toby Bochan, Luke Kawa
3h
US stocks go nowhere amid big rotation out of gold and into fake meat

The calmest session for the S&P 500 in over a month.

a sunny field
Jon Keegan
8h
OpenAI releases Chrome-competitor browser “ChatGPT Atlas,” sending Google shares down

ChatGPT currently poses little threat to Google’s search business, but an OpenAI browser — and the data that comes with it — could change everything.

Screenshot of ChatGPT Atlas browser
markets
Luke Kawa

The no-fundamentals, high-volatility winning trades are reversing hard

The volatile, speculative momentum trades that have been on fire in recent months are getting smoked.

The SPDR Gold Shares ETF is on track for its biggest daily loss since April 2013, as of 10:28 a.m. ET.

And Goldman Sachs’ baskets of “high beta momentum longs” and “non-profitable tech” stocks, which have pretty much been the exact same line for two months, got dumped last Thursday and are down big again today.

D-Wave Quantum, Planet Labs, and Navitas Semiconductor are some of the stocks that feature in both of Goldman’s baskets and are down more than 2% as of 10:24 a.m. ET.

All of these groups have been handily outperforming the S&P 500 for an extended period of time despite by their very nature having more hype than actual track records — in terms of producing profits for shareholders — to speak of. Gold, obviously, generates no income. Nonprofitable tech stocks aren’t really in a position to spin off cash they don’t have to their owners. And, as mentioned, high-beta momentum and nonprofitable tech stocks have pretty much traded the same!

It’s difficult to pinpoint a fundamental catalyst for why speculative momentum trades suddenly turn on a dime, just as it’s often tricky to identify why they went on such a mammoth run in the first place. Perhaps the onset of earnings season — which gives us the opportunity to assess fundamental progress — means that right now, there’s more attention being paid to “line go up” when it comes to revenues and profits, and that’s taking away from the mindshare on “line go up” with respect to recent share price performance.

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