The recent short-seller report on C3.ai had some exaggerated claims that could potentially harm the company’s stock value. The report focused on “serious accounting and disclosure issues” that may cause concern for investors. However, there are three key takeaways from the report that investors should keep in mind.
Firstly, C3.ai’s aged receivables are high, with days of sales outstanding at 163 days. This is a metric investors should watch for in future quarters. Secondly, the company’s gross profit margins are not unreasonably high compared to other tech companies that generate revenue from recurring services they provide. C3.ai’s gross profit margins are considerably lower than those of other companies in the industry. Lastly, the report claimed that the CFO is inexperienced, which is not true as the current CFO has eight years of experience working for a top accounting firm.
Investors should always be careful with short-seller reports and take the allegations with a grain of salt. It is important to make decisions based on a company’s fundamentals and outlook for the business, rather than what a biased short-seller report says. While there may be some temporary concerns with C3.ai’s high receivables balance, the company has a lot of potential and is a worthwhile investment opportunity.