C3.ai (AI 4.10%) stock jumped 2.1% through 9:50 a.m. ET Wednesday after The Information and other media outlets reported the artificial intelligence app maker is in merger talks with privately held AI company Automation Anywhere (AA).
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Details, please
Details on the rumored transaction are sparse. What we do know is this:
San Jose, Calif.-based Automation Anywhere is believed to have had a private market valuation of $6.8 billion in 2019. While it's unclear how much AA is worth today, any merger between it and C3.ai -- valued at only $1.8 billion, and just $1.1 billion net of cash -- would probably take the form of AA buying C3.
In other words, this isn't so much a merger as a buyout -- if it even happens.
NYSE: AI
Key Data Points
Is C3.ai stock a buy?
And of course, it may not happen, in which case buying C3.ai stock on rumors that Automation Anywhere might buy it would result in nothing more than you owning C3 stock. Would that be a good or bad idea?
Most likely bad.
C3 has been losing increasing amounts of money every year for the last five years. Over the last 12 months, C3 stock racked up $381 million in losses, and analysts polled by S&P Global Market Intelligence say that's not changing anytime soon. As far out as analysts are willing to make projections (2028), C3 is forecast to keep losing money.
Granted, C3 does have the cash to last that long. With $675 million in the bank and annual cash burn of $93 million, C3's probably got seven years or more before it runs completely out of money. The bad news is that, unless AA buys it... C3 may keep losing money for all seven of those years.
