Cerebras Systems (CBRS) shares plunged more than 9% in extended trading after the company posted its first quarterly report since going public, despite revenue and guidance that handily beat Wall Street expectations. The drop validated a bearish skew observed in the options market just hours before the release.
Ahead of the earnings call, Barchart data showed a put-to-call ratio of 1.75 on contracts expiring June 26, with traders anticipating a further slide. The lower bound on those options pegged the stock near $187, implying a potential drop of about 12.7% from the day’s close. Technical indicators also warned of further downside: CBRS had fallen below its 20-day moving average and the RSI hovered in the low 40s, leaving room for more decline before an oversold signal.
When the numbers landed, the top line looked strong. Revenue for Q1 came in at $193.4 million, up 94% year-over-year and ahead of the $181 million consensus. Cloud and services revenue surged 178%. The adjusted operating loss narrowed dramatically to $3.5 million from $19.3 million a year earlier. For Q2, the company guided revenue of $194 million, topping the $178 million estimate and pointing to 88% annual growth.
But the market’s focus shifted to profitability. Full-year gross margin guidance was set at 38–41%, with the Q2 range tightening to 36–38% — well below what would be expected for a high-multiple chip stock. The squeeze comes from Cerebras renting back equipment it had sold to other customers in order to meet surging demand from OpenAI. A massive $20 billion multi-year deal with the AI lab is the primary growth engine, but the associated warrant issuance (33.4 million shares granted practically for free) is recorded as contra-revenue, a non-cash headwind flagged by Needham analyst Quinn Bolton.
An additional overhang is the lock-up expiry this Thursday, which will make roughly 13% of IPO shares eligible for trading by insiders and early investors. A second, larger unlock is expected two days after Q2 earnings. Only about 15% of total shares were sold in the May IPO, which priced at $185; the stock briefly hit $386 on its first day of trading but has since given back much of those gains.
Even after the post-earnings decline, analysts maintain an average price target of $294 and a “Strong Buy” rating, according to FactSet. Cerebras also reported a $24.6 billion backlog, with $3.7 billion of that to be recognized as revenue in 2026 and 2027. Core revenue is projected to reach $7.2 billion by 2028, with adjusted EPS of $5.53.
