C3.ai Shares Drop 30% Following ‘Unacceptable’ Results and CEO Health Issues
In recent trading, C3.ai’s stock tumbled as much as 30% after the company reported preliminary Q1 results that fell drastically short of expectations. The dramatic downturn was attributed to underwhelming sales performance and the health-related absence of its founder and CEO, Thomas (“Tom”) Siebel.
This has sparked alarm among investors tracking AI stocks, with serious questions now looming over the company’s stability and future prospects.
Stunning Miss in Q1 Results Sends Shockwaves Through the Market
In its July-ended fiscal first quarter, C3.ai disclosed revenue of just $70.2–$70.4 million, nearly 33% below its previously guided range of $124.7–$124.9 million and about 19% lower than the same quarter last year. Meanwhile, the announced adjusted operating loss of $57.7–$59.9 million came in at almost double the earlier forecast of $23.5–$33.5 million.
The market reaction was immediate: shares plunged roughly 29%–31%, reaching levels not seen since January 2023. Analysts didn’t mince words, D.A. Davidson called the results “catastrophic” and downgraded the stock, while Wedbush trimmed its price target from $35 to $23, still holding an Outperform rating.
CEO’s Health Woes and Transition Heighten Investor Anxiety
The poor performance was attributed in part to disruptions from a global sales and service reorganization, exacerbated by Siebel’s autoimmune disease, which led to significant visual impairment and limited his involvement. As a result, Siebel announced his intention to step down as CEO, moving into the role of Executive Chairman once a successor is in place.
The announcement alone caused a 10–11% decline in shares upon release, as investors digested the leadership shake-up. Analysts are now speculating that the transition may trigger interest from strategic buyers, particularly given Siebel’s controlling interest in the company, about 27% economic ownership, and over 54% voting control.
Mixed Analyst Sentiment: Cautious Optimism vs. Persistent Skepticism
Financial experts remain divided on C3.ai’s outlook. Wedbush’s Daniel Ives maintains an Outperform rating, anticipating a possible rebound in future quarters and backing the decision to revamp sales leadership.
On the opposite spectrum, D.A. Davidson’s Gil Luria downgraded to Underperform, cutting the price target to $13 and warning that further disruption may lie ahead, and that M&A activity remains unlikely until the company stabilizes financially.
C3.ai’s Longer-Term Challenges Persist Despite Growth Signs
Even before the recent collapse, C3.ai’s stock had endured a roughly 29% decline in the first half of 2025 following an underwhelming Q3 earnings report in February, where it posted a wide loss despite 26% revenue growth.
Earlier in the year, the company had shown some expansion, reporting Q4 revenue of $108.7 million, up 26% year-over-year, but still registering a 16¢ adjusted loss per share.
As of mid-year, C3.ai maintained healthy liquidity, reflected in a strong current ratio (over 6.7), but faced concerns related to widening losses, negative cash flow, and inefficient pilot-to-production conversion rates.
What Lies Ahead for C3.ai?
- Leadership transition: Securing a seasoned successor to Siebel is a top priority. Stability depends on a smooth handover and confidence in the new leadership.
- Sales turnaround: The newly reorganized sales team, led by Rob Schilling, may be key to steering the company back toward momentum.
- Operational discipline: Investors will want to see evidence of better cost control, pilot conversions, and a path to sustainable profitability.
- Strategic alternatives: Merger discussions could emerge if the new leadership deems it beneficial or inevitable.
Conclusion
C3.ai’s latest quarter has rattled investor confidence, combining a severe revenue miss with leadership uncertainty. While the company’s AI technology remains relevant in a rapidly growing sector, its path forward hinges on a successful CEO transition, sales execution, and restoring operational discipline. The next few quarters will be critical in determining whether C3.ai can rebound or remain under sustained market pressure.
FAQs
The plunging stock was triggered by preliminary Q1 results showing a one-third miss in revenue, nearly doubled operating losses, and CEO disruption due to health issues, all sparking investor nervousness.
Siebel’s health, specifically an autoimmune disease affecting his vision, limited his ability to lead effectively. He is stepping down as CEO and transitioning to Executive Chairman, while a search is underway for a successor.
Opinions are split. Wedbush retains an Outperform rating with a lowered price target of $23, banking on a potential rebound. Meanwhile, D.A. Davidson downgraded to Underperform, with a price target of $13, citing ongoing uncertainty and suggesting that M&A activity is unlikely until the company demonstrates financial stability.
Disclaimer:
This content is made for learning only. It is not meant to give financial advice. Always check the facts yourself. Financial decisions need detailed research.