From Yahoo Finance · · 1m 20s
Cerebras Stock Halved, Still 145x Next Year Earnings
Cerebras stock dropped 52% from IPO but still trades at 145 times next year's earnings.
In brief
Cerebras stock dropped 52% from IPO but still trades at 145 times next year's earnings. Cerebras stock fell 52% from its IPO peak but remains 145 times next year's expected earnings, indicating investors priced in rapid growth potential. Originally reported by Yahoo Finance.
Cerebras stock halved
Cerebras Systems stock dropped 52% from its May IPO peak of $386.34 to trade around $184.
“Cerebras Systems (NASDAQ:CBRS) has been cut in half. Shares of the artificial intelligence (AI) computing specialist peaked at $386.34 on their first day of trading in May”
IPO raised $6.4 billion
The company raised $6.4 billion in its May IPO at $185 per share.
“Cerebras Systems (NASDAQ:CBRS) has been cut in half. Shares of the artificial intelligence (AI) computing specialist peaked at $386.34 on their first day of trading in May, a day after the company priced its initial public offering (IPO) at $185 and raised $6.4 billion”
Strong August update
Cerebras reported $209.9 million core revenue up 103% year over year with improving margins.
“In its mid-August update, Cerebras reported core revenue (a measure that strips out pass-through data center revenue and adds back a noncash deduction tied to customer warrants) of $209.9 million, up 103% year over year, with core gross margin improving to 41% and core operating margin to negative 16%”
Cloud revenue accelerating
Cloud services revenue grew 281% year over year to $126 million in the second quarter.
“Cloud and other services revenue, as reported under generally accepted accounting principles (GAAP), was $33 million in the year-ago quarter, about $83 million in this year's first quarter, and $126 million in the second, up 281% year over year”
Valuation at 145x earnings
At $184, Cerebras trades at 145 times next year's expected earnings of $1.25 per share.
“Analysts expect Cerebras to earn about $1.25 per share next year. At around $184, the stock costs about 145 times those expected earnings”
IPO peak at 310x earnings
The stock peaked at 310 times next year's expected earnings when it was $386.34.
“May's $386.34 peak worked out to about 310 times next year's expected earnings”
Backlog for growth
Cerebras has $25.4 billion in performance obligations tied to OpenAI's 750 megawatt AI capacity purchase.
“Cerebras ended June with $25.4 billion in remaining performance obligations (work customers have committed to pay for but the company hasn't yet delivered), much of it tied to a single agreement under which OpenAI committed to purchase 750 megawatts of AI computing capacity”
Revenue vs earnings
Cerebras needs $6 per share annually to trade at 30 times earnings, but analysts expect only $1.25 next year.
“At about $184 per share, Cerebras would need to earn about $6 per share annually, nearly five times what analysts expect for next year”
Growth timeline
Most of the backlog converts after mid-2028, with profits still years away from current pricing.
“After all, Cerebras ran a core operating loss last quarter even with sales doubling, and most of the backlog converts after mid-2028”
What to remember
Cerebras stock fell 52% from its IPO peak but remains 145 times next year's expected earnings, indicating investors priced in rapid growth potential.
