Options Bulls Eye Software Stock Despite Slew of Bear Notes

Piper Sandler downgraded the stock to "neutral" from "overweight"

Digital Content Manager
Jun 2, 2022 at 1:00 PM
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The shares of C3.ai Inc (NYSE:AI) are down 8.9% at $16.90 at last check, despite the tech name's smaller-than-expected fiscal fourth-quarter losses, which came alongside a revenue beat. What's hurting the equity instead is a dismal current-quarter and annual revenue forecast, which came well below analysts' estimates due to slower customer growth and weaker demand. 

In turn, Piper Sandler downgraded the stock to "neutral" from "overweight," and slashed its price objective to $15 from $28. Another five analysts followed suit with price target cuts as well. The brokerage bunch was already pessimistic on AI heading into today, with five of the seven firms in coverage calling the security a tepid "hold" or worse. 

Short sellers remain in control. In fact, the 16.49 million shares sold short account for 18.7% of AI's available float, or more than one week's worth of pent-up buying power.

Options traders are chiming in on the earnings results today. So far, 10,000 calls and 3,904 puts have been traded, or seven times the intraday average. The most popular contract is the June 17.50 call, where positions are being opened, followed by the 20 call in the same monthly series.

Digging deeper, the $20 level last week rejected the security's rally off its May 12, all-time low of $13.37. Shares are today pacing for their worst day since early May and eyeing a close back below the 20-day moving average. In the past 12 months, AI has shed 77.9%.

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