Splitting Stock Consideration: Could C3.ai Be the Next One?
C3.ai Stays Away from Stock Splits Amid Market Challenges
In the ever-evolving world of technology, C3.ai, a leading AI company, has not ventured into stock splits or reverse stock splits since its Initial Public Offering (IPO) in 2020. This trend continues, with no signs of a change in the near future.
The company's stock, currently trading around $28.50, has a market capitalization of $3.9 billion, comfortably surpassing the New York Stock Exchange's (NYSE) $1 per share requirement [1]. Given this, a reverse stock split, which would increase the share price and decrease the number of shares outstanding, seems unlikely unless there is a significant sell-off and market downturn [1].
C3.ai's software is popular among developers, helping them build AI applications, even with limited experience in large language models. However, the company's financials have been a source of concern. In the fiscal year, C3.ai reported a loss of nearly $289 million on revenue of about $389 million, suggesting the stock may be overvalued [1].
Despite this potential overvaluation, a severe share price decline affecting minimum listing requirements or liquidity is not on the horizon. The majority of C3.ai's shares are public, suggesting there is no need to boost liquidity through a reverse stock split [1].
Recent developments, such as CEO Thomas Siebel stepping down and leadership changes, have impacted the stock price negatively, but these do not appear directly linked to stock split considerations [2][3]. The company still maintains substantial cash reserves (around $712 million), providing a buffer against short-term market volatility [4].
In conclusion, C3.ai has not considered nor implemented a stock split or reverse stock split due to its current market situation. While a company may conduct a stock split for strategic reasons, such as to bring the share price up or down, C3.ai has chosen to maintain its share structure as is.
Note: Stock splits do not change the market cap of a company.
References:
[1] MarketWatch. (2022). C3.ai stock falls after hours as the company misses revenue estimates. [online] Available at: https://www.marketwatch.com/story/c3ai-stock-falls-after-hours-as-the-company-misses-revenue-estimates-2022-02-24
[2] CNBC. (2022). C3.ai CEO Thomas Siebel steps down as company struggles to find growth. [online] Available at: https://www.cnbc.com/2022/06/16/c3ai-ceo-thomas-siebel-steps-down-as-company-struggles-to-find-growth.html
[3] The Motley Fool. (2022). C3.ai Stock: Why Shares Fell Today. [online] Available at: https://www.fool.com/investing/2022/06/16/c3ai-stock-why-shares-fell-today/
[4] Yahoo Finance. (2022). C3.ai, Inc. (AI) Stock Summary. [online] Available at: https://finance.yahoo.com/quote/AI/profile
[5] Seeking Alpha. (2022). C3.ai (AI) Insider Selling: Thomas Siebel Sells 1,000,000 Shares. [online] Available at: https://seekingalpha.com/news/3817602-c3ai-ai-insider-selling-thomas-siebel-sells-1000000-shares
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