When stocks go into oversold territory, it can be a great time to buy on the dip. And one way to measure that is by using the Relative Strength Index (RSI), which gauges momentum. If there is an excessive amount of selling, the RSI level drops and once it falls below 30, a stock is considered oversold.
That is where C3.ai, Inc. (NYSE:AI) found itself as of the end of last week. Shares of the artificial intelligence company have cratered an incredible 45% in just the past month. C3 released its first quarterly results as a public company on March 1 and the results weren't inspiring.
Third-quarter sales of $49.1 million grew at a rate of 19% year over year but its subscription revenue declined by 4% while the company incurred a loss of $16.9 million. And for the fourth quarter, the company is only expecting sales to come in between $50 million to $51 million – for growth of no higher than 4% from Q3.
Those aren't the type of growth numbers investors normally come to expect for a top tech stock. And although it initially jumped out of the gate when it began trading in December 2020, C3's stock is now down around 20% since its shares first began trading. However, even with the sharp decline in price, it is still trading at more than 30 times its sales, which is a hefty multiple when combined with its lack of profitability.
Given the steep selloff of tech stocks of late and C3's expensive price and lack of growth, now may not be the best time to invest in the company.
