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Cerebras IPO - not looking good ("Too much hair on this deal"??)

blueone

Well-known member
While its position in artificial intelligence infrastructure represents a major tail wind, Cerebras has challenges — most notably a hefty reliance on a single Middle Eastern customer — that may prove too weighty to overcome in the company’s attempt to ride the Nvidia wave. Valued at $4 billion in 2021, Cerebras is reportedly seeking to roughly double that in its IPO.

“There’s too much hair on this deal,” David Golden, a startup investor at Revolution Ventures who led tech investment banking at JPMorgan Chase from 2000 to 2006, said in an interview this week. “This would never have gotten through our underwriting committee.”

Cerebras launched in 2016 and three years later unveiled its first processor. The company, headquartered in Sunnyvale, California, claims its current chip is faster and more efficient than Nvidia’s graphics processing unit, or GPU, for training large language models.

In 2023, Cerebras’ sales more than tripled to $78.7 million. In the first half of 2024, revenue climbed to $136.4 million, and growth appears poised to ramp up significantly, as Cerebras says in its prospectus that it’s signed agreements to sell $1.43 billion worth of systems and services, with prepayment expected before March 2025.

But the most glaring red flag in Cerebras’ filing relates to customer concentration. One company based in Abu Dhabi accounted for 87% of revenue in the first half of the year. The customer, G42, is backed by Microsoft, and it’s entirely responsible for the $1.43 billion purchase commitment.

 
"Too much hair on this deal" is definitely a new term to me - I think there's some terms that should never become common.

Interesting though some interviews showing concerns about this.

Some info on an IPO Delay for Cerebras:

  • Cerebras likely to postpone IPO due to CFIUS review delay
  • CFIUS reviewing G42's investment in Cerebras
  • G42 business accounted for 83% of Cerebras' 2023 revenue
  • Cerebras and G42 amended filing to specify non-voting securities
 
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