Shares of artificial intelligence specialist C3.ai (NYSE:AI) popped dramatically higher on Monday on overall positive preliminary earnings results. As well, AI stock — which gained over 19% during the early afternoon hours — may have responded to contrarian speculation.
According to the accompanying press release, C3.ai early this morning posted preliminary results for its fiscal fourth quarter and fiscal year ended April 30, 2023. In particular, total revenue for the quarter will likely land between $72.1 million and $72.4 million, exceeding company guidance.
As well, net cash from operating activities will likely clock in between $28.1 million and $29.5 million. Positive free cash flow will end up between $18 million and $19.4 million.
Also, GAAP loss from operations will come in between $75.9 million and $77.1 million. Non-GAAP loss from operations will sit between $23.7 million and $23.9 million. In comparison, the prior guidance called for a loss of $24 million to $28 million.
Moreover, Barron’s reported that it closed 43 deals during fiscal Q4. In addition, C3.ai’s consumption-based pricing model continues to generate positive momentum within the consumer base. Therefore, the encouraging steps taken as the company aims for profitability lifted AI stock. For the year, shares are now up over 109%.
AI Stock Appears to Attract Contrarian Investors
To be sure, the upswing for AI stock hasn’t come easy. In the past one-year period, shares gained about 39%, a worthwhile performance but a far cry from 109%. Essentially, the wild gyrations in the security will upset all but those with iron stomachs. Still, the intense mobility in the charts presents enticing opportunities for contrarian investors.
According to data from Fintel, the short interest for AI stock hit 32.12% of its float. Also, its off-exchange short volume ratio clocked in at 56.42%. To be fair, the short-interest ratio is somewhat muted at 4.32 days to cover.
Nevertheless, AI stock reached 78.23 out of 100 in Fintel’s proprietary Short Squeeze Score. Per the investment resource, “[t]he number ranges from 0 to 100, with higher numbers indicating a higher risk of a short squeeze relative to its peers, and 50 being the average.”
Also, Fintel points out that out of the 4,569 shorted securities it covers, AI stock ranks as number 481. Therefore, it’s not out of the question that C3.ai could once again skyrocket higher. Still, investors should also be aware that since the company’s public market debut, it lost around 80% of equity value.
Why It Matters
According to TipRanks, Wall Street analysts peg AI stock as a lackluster consensus hold. This assessment breaks down as three buys, three holds and three sells. Overall, the experts’ average price target lands at $21, implying more than 10% downside risk (due to today’s massive rise).
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
