C3.ai Targets Over $3 Billion Valuation Despite Stalling Revenue Growth
Enterprise AI company C3.ai sets an initial IPO price range of $31 to $34 per share, targeting a valuation over $3 billion. This ambitious pricing occurs despite the company reporting nearly flat revenue growth in recent quarters.
Enterprise artificial intelligence company C3.ai sets an initial IPO price range of $31 to $34 per share, aiming to sell 15.5 million shares. Alongside this public offering, the company sells $100 million of stock to Spring Creek Capital and $50 million to Microsoft at the same IPO price terms. After accounting for all shares, including those reserved for underwriters, C3.ai targets a total valuation between $3.08 billion and $3.37 billion.
This high valuation raises questions because C3.ai currently experiences slowing revenue growth. While the company shows an 11% year-over-year increase when comparing specific six-month periods, its recent quarterly numbers tell a different story. Between January and October 2020, the company's revenue grows by less than $100,000, effectively hitting a revenue plateau.
The situation appears even more concerning when noting that C3.ai's revenue in both the July and October 2020 quarters is actually smaller than in preceding periods. This stagnant growth creates a puzzling scenario for investors, as the market attempts to assign a multi-billion dollar price tag to an unprofitable tech company that is currently struggling to expand its top line.