Cerebras Shares Dive Post-Earnings as CEO Clarifies Margin Expectations Misinterpretation
Cerebras Systems saw a nearly 20% decline in stock value on Wednesday, despite reporting stronger-than-anticipated earnings for the first quarter a day earlier.
The drop came after the AI chip manufacturer indicated in its inaugural earnings report since becoming publicly traded that it expects its gross margin to be lower in its primary business. The company has projected a full-year margin of between 38% and 41%, a decrease from the 47% margin reported for the first quarter. This led the stock to reach a new low, approaching its initial public offering price.
Cerebras’ CEO, Andrew Feldman, stated to CNBC that the outlook on margins might have been misinterpreted by investors. He explained that the company will need to lease back some of its equipment from one of its main clients.
During the earnings call, the firm explained its strategy to increase capacity sooner by temporarily leasing its own systems back from an existing customer while it works on establishing and expanding its data center capabilities. This plan is expected to impact profit margins negatively in the current year.
The earnings report revealed that revenue for the quarter reached $193 million, marking a 94% increase compared to the previous year. Additionally, the net loss was reduced to $14 million, an improvement from the $23.9 million loss in the same quarter last year.
