A broader semiconductor sell-off is weighing on Cerebras Systems (CBRS) shares as the company warms up to report its quarterly earnings later today (after market close).
While the Nasdaq-listed firm is widely regarded as “The Nvidia Challenger”, options traders aren’t entirely convinced that the Q1 print will help it reclaim some of its year-to-date losses in the days ahead.
Heading into the financial release, Cerebras stock is down some 30% versus the start of this year.
Where options data suggests Cerebras stock is headed
Options data from Barchart shows the put-to-call ratio on contracts expiring Jun. 26 sits at 1.75 at the time of writing, indicating a very strong bearish skew.
The lower price on those contracts is set at about $187 currently, signaling CBRS shares will likely continue their plunge and lose another 12.7% by the end of this week.
Crucially, technical indicators also favour further downside. Cerebras tanked below its 20-day MA this morning, suggesting bears have taken back control for the near-term.
Plus, the company’s relative strength index (RSI) sits in the early 40s currently, reinforcing potential for further decline before the stock slips into the “oversold” territory.
Cerebras Technicals
CBRS shares are overvalued heading into Q1 earnings
Options traders remain bearish on Cerebras shares primarily because they’re trading at a stretched price-to-sales (P/S) multiple of about 91x currently.
And that’s when the company is broadly expected to remain in loss in its fiscal Q1; analysts’ call currently sits at negative $0.14 per share for the first quarter.
Moreover, estimates for CBRS’s revenue hover around $57 million at writing, which would mean the semiconductor firm is on track to post a year-over-year sales decline in 2026; its top-line came in at $510 million last year.
Considering these numbers, it’s increasingly difficult to justify Cerebras Systems current valuation multiple which actually sits miles above the chip sector leader, Nvidia, at about 23x sales only.
Investors use price-to-sales multiples to assess a company’s valuation relative to the revenue it is expected to generate.
With the growth of online investment platforms, tracking such metrics has become significantly easier and more accessible to market participants.
How to play Cerebras Systems at current levels
Compounding CBRS stock’s valuation headache is the hangover of its blockbuster initial public offering (IPO) last month.
Listing on May 14th at a whopping $185 per share, and briefly skyrocketing above $380, Cerebras has since fallen victim to brutal post-IPO profit-taking and cooling AI infrastructure hype.
While the company’s hardware itself remains undeniably revolutionary – featuring the monolithic WSE-3 processor designed to bypass traditional multi-chip bottlenecks, analysts are pivoting from theoretical compute capability to actual sequential execution.
For Cerebras Systems Inc to stabilize its volatile stock, management must use tonight’s conference call to outline concrete customer diversification, ensuring that its immense processing power translates into a sustainable, growing order book.
That said, Wall Street continues to rate CBRS at “Strong Buy”, with a bullish mean price target of about $289.
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