Cerebras stock drops 25% after margin outlook clarification
▼ Summary
– Cerebras Systems shares fell nearly 20% despite beating first-quarter earnings estimates, hitting a new low near its IPO price.
– The drop followed the company’s forecast of a narrower core gross margin of 38% to 41% for the full year, down from 47% in Q1.
– CEO Andrew Feldman said investors misunderstood the guidance, explaining the margin dip is due to renting back equipment from a major customer.
– Cerebras is temporarily leasing its own systems from an existing customer to increase capacity faster, which will reduce profit margins this year.
– First-quarter revenue rose 94% year-over-year to $193 million, while net loss narrowed to $14 million from $23.9 million.
Shares of Cerebras Systems tumbled nearly 20% on Wednesday, erasing gains from a better-than-expected first-quarter earnings report released the prior day. The steep drop came after the AI chipmaker provided a narrower gross margin outlook for its core business in its first quarterly report as a public company, forecasting a full-year margin between 38% and 41%, well below the 47% it posted in Q1. The stock slid to a new low, brushing against the company’s IPO price.
Cerebras CEO Andrew Feldman told CNBC that the market had misread the margin guidance. He explained that the company would need to rent back some equipment from one of its largest customers. During the earnings call, Cerebras stated it had decided to make additional capacity available sooner by temporarily leasing its own systems from an existing customer while it builds out and deploys its own data center infrastructure. That arrangement, the company said, would compress profit margins for the current year.
Despite the market’s reaction, Cerebras reported strong first-quarter revenue of $193 million, a 94% increase year-over-year. Meanwhile, its net loss narrowed to $14 million, down from $23.9 million in the same period last year.
(Source: TechCrunch)
