Is CBRS a Trap? Why I Won't Touch This Hot IPO

本站添加: 2026-06-02

[00:00:09]Squidgy iguana, good day James.

[00:00:10]Wondering if you have any thoughts on Cerebras Systems, CBRS. Seeing a lot of talk about them lately. Thanks for all you do. Thanks, I had the same question, too. CRW7.

[00:00:20]So, let's look at Cerebras, the financials.

[00:00:24]By the way, I couldn't pull up all the detailed financials in GuruFocus for some reason. Wasn't there, or some weird financials in space. And don't get confused between CRBS and CBRS.

[00:00:34]It's very easy to trip up on those two tickers.

[00:00:38]But, their revenue is growing, but they're losing money. And I always thought that IPOs need to come out of the gate profitable, but that's not the case.

[00:00:48]Their price-to-sales ratio is 103. Very high.

[00:00:51]Now, if you're a fan of Cathie Wood, she bought it on Tuesday last week, uh, 25,000 shares, and uh, five, uh, 10,000. So, in combination, over 35,000 shares of Cerebras. And it's not a cheap stock, by the way. Let's have a look at some other stuff.

[00:01:11]Yes. Let's talk about why it is good, and why I won't touch it.

[00:01:17]The two big questions in life.

[00:01:19]Uh, first of all, they do have some impressive things going for them.

[00:01:23]They have built an impressive wafer-scale technology. It's a big, like it's the size big, big ring. I don't know about the very huge plate. Giant chip with hundreds of thousands of cores. And it's, uh, I see it as an Nvidia inference alternative. Remember, in the future, 99% of all compute will be inference.

[00:01:41]It is answering stuff, not learning.

[00:01:43]They've done big deals with OpenAI, Amazon Web Services. Huge FOMO. And the IPO had 20X oversubscribed. Huge demand.

[00:01:52]So, they could juice it hot, because it's a classic hot IPO pattern.

[00:01:57]A lot of FOMO there. So, that's the good news.

[00:02:01]The bad news, why I don't touch it?

[00:02:03]Classic classic hot pattern, 80% fall after the IPO. Do not be exit liquidity.

[00:02:11]Now, very important here, I don't know if SpaceX will follow the same pattern. There's a 20% chance it doesn't. We have to watch this very carefully. So, bear that in mind as well. But, this Cerebras is classic hot pattern.

[00:02:25]Um it history shows the hype tech IPOs hugely oversubscribed. You know, they pop 50% on the first day or more.

[00:02:34]And then they give back gains in the following months.

[00:02:37]The post IPO dip sometimes takes 3 months, sometimes takes 6 months.

[00:02:41]Normally, 90 days.

[00:02:43]And the valuation is 52 billion. For that to make sense, they have to grow revenue dramatically for years and years and expand their margins significantly and win a huge amount of money mar market share, market share from Nvidia, which has massive software moat. They don't have that type of moat at all.

[00:03:03]And harder reality is very high cost of goods sold, very complex manufacturing process, hugely long sales cycles, and heavy ongoing R&D to stay competitive. This is not a high [clears throat] margin business by any stretch of the imagination. Shout out to software.

[00:03:21]So, be careful of this one.

[00:03:24]Let's So, this is why I'm not going to touch it.

[00:03:27]If they were making [clears throat] tons of profit and they had infinite demand going out the down the street for next 5 years, and they were making 82% margin on everything they sold, yeah, but they're not.

[00:03:40]Now, Cerebras post IPO dip, here we go.

[00:03:45]Classic I'll turn off my camera so you guys can see this beautiful chart. I'm we're out of the box a couple of days. It's already down 40%.

[00:03:55]Uh where that little buy signal is, by the way, I think that's where Cathie Wood bought.

[00:04:00]But then it fell, and then that little spike sell signal, and it tanked again. So, who knows where this will go?

[00:04:08]Currently, the price is circa 235 237.

[00:04:15]It could go back to nearly 400 where it came from, >> [sighs and gasps] >> but there's a lot of people looking to get out of the door. Wait for them to leave the building and then jump in if you want. But we have to keep a very close eye on financials. And the good news is, we'll have a good earnings report before all the selling will be done, as well. Hope that helps regarding Cerberus. And I like the name.

[00:04:36]It's very cerebral, which I like, brainy.

[00:04:40]But it's difficult, very difficult space to be in.

[00:04:52]>> [bell]