After a disappointing stock debut that saw the price almost double up before losing over 70% of the value, there are some bottoming signs for C3.ai Inc (NYSE: AI)
This article will examine some of the latest developments, along with the recent insider transactions.
Quarterly Earnings Report
- GAAP EPS: -US$0.37 (in-line)
- Revenue: US$52.4m (beat by US$1.13m)
- Subscription revenue: Increase 29% y/y
- FY Guidance: US$243-247m vs. consensus 245.36m
Regardless of the revenue growth and subscription increase, the market didn't like the numbers, as the stock initially went down over 9%. However, it recovered in the following days.
Meanwhile, the company announced a partnership with Google, as companies are teaming up to sell C3 AI's enterprise artificial applications running on Google Cloud. The terms of the deal yet remain undisclosed.
Google is the latest addition to a prestigious list of partners that now include 3M(NYSE: MMM), Bank of America(NYSE: BAC), Microsoft(NASDAQ: MSFT), but also government agencies like the U.S. Airforce.
C3.ai Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Founder, Thomas Siebel, sold US$157m worth of shares at US$92.23 per share.
While insider selling is negative, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$51.47. So it may not shed much light on insider confidence at current levels.
All up, insiders sold more shares in C3.ai than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, click on the graph below!
You will not want to miss this free list of growing companies that insiders are buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own.
C3.ai insiders own 15% of the company, currently worth about US$787m based on the recent share price. This kind of significant ownership by insiders generally increases the chance that the company is run in the interest of all shareholders.
What Does This Data Suggest About C3.ai Insiders?
Over the last three months, we've seen notably more insider selling than insider buying at C3.ai.We note insiders cashed in US$127m worth of shares. On the flip side, Director Jim Snabe spent US$645k on purchasing shares (as mentioned above).
The stark truth for C3.ai is that there has been more insider selling than insider buying in the last three months. And our longer-term analysis of insider transactions didn't bring confidence, either. However, we must note that the share lockup date was June 7th, thus holding back all the stock-compensated insiders from selling out early.
The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. C3.ai is showing 4 warning signs in our investment analysis, and 1 of those is significant.
If you prefer to check out another company with potentially superior financials, do not miss this free list of interesting companies with high returns on equity and low debt.
For this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
Simply Wall St analyst Stjepan Kalinic and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.