C3.ai Stock Is Under Pressure as Legal Troubles Mount
California-based enterprise artificial intelligence firm C3.ai (NYSE:AI) offers AI-focused software-as-a-service (SaaS) applications internationally. The revolution in machine learning is definitely underway, but AI stock doesn’t look like a sure winner.
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C3.ai priced its initial public offering at $42 per share on Dec. 9, 2020. But the sought-after shares opened the day at $100. Two weeks later, AI stock hit an all-time high just below $184.
This impressive rally didn’t last long though. Shares have been in a downtrend since early 2021. At the start of 2022, AI stock was trading in the low $30s. Now, it’s barely holding the $20 level.
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At one point, CEO Tom Siebel seemingly tried to jawbone the share price higher, calling AI stock “a massively undervalued security.” He added: “Investors may not understand the magnitude of the addressable market… But the stock is a screaming buy.”
Siebel might be a pretty good hype man, but the investing community doesn’t seem particularly bullish about AI stock. That is likely due in part to the fact that C3.ai is facing a number of potential and actual lawsuits.
For example, InvestorPlace contributor Will Ashworth recently reported on a class-action lawsuit filed against C3.ai that alleges its IPO documents contained misleading statements about the business. “These statements may have persuaded investors its stock was a good investment,” Ashworth writes.
The investor rights law firm bringing the suit, Rosen Law Firm, sent out a press release last week reminding early investors that they may be entitled to compensation.
This isn’t an isolated incident either. Last week, we saw law firm Kirby McInerney put out a similar reminder and firm Levi & Korsinsky notify investors of another lawsuit against C3.ai.
There’s also a lawsuit from Kahn Swick & Foti and the firm’s partner, former Attorney General of Louisiana, Charles C. Foti, Jr. This one accuses C3.ai and some of its executives of “failing to disclose material information during the Class Period and/or in the Registration Statement and Prospectus issued in conjunction with the initial public offering, violating federal securities laws.”
C3.ai isn’t the only investable, machine-learning-focused company out there. Holding AI stock now would be risky, as ongoing litigation could spook investors and send the share price into the single digits. Therefore, it’s probably a good idea to stay on the sidelines, at least for the remainder of the year.
On the date of publication, David Moadel 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.
David Moadel has provided compelling content -and crossed the occasional line -on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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