Introduction

On Wednesday, July 27, 2022, Cambricon's stock price began to plummet after its listing in the afternoon, almost becoming the only stock to decline. During this period, there were many voices regarding why Cambricon's stock price fell, with some even stating that Cambricon's market value was distortedly high. However, the rapid decline in Cambricon's stock price became a focal point for many.

At this time, Cambricon also stated that there were no issues with the company's operations. Employees who came out from a live video climbed the company building at 5:38 PM on July 27th and shouted, "If there are any problems with the company, we need to come out and explain." This further attracted market onlookers. This matter has not been clearly explained, so how should we view Cambricon's sudden crash this time?

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Is Cambricon's high market value compared to other artificial intelligence companies not a liquidity issue?

Although some shareholders began to doubt the reasons for Cambricon's profits and liquidity issues, after all, some artificial intelligence companies with low profits or even no profits are soaring in the market. The market also holds a very optimistic attitude towards the prospects of artificial intelligence. As a leading company in the artificial intelligence sector, why was Cambricon suddenly abandoned by the market due to the issue of losses?

As a company that has been losing money for 8 years, Cambricon has continued to show losses after its listing in 2020. This means that some regulatory policies in the A-share market have been relaxed, and perhaps we can also see that the A-share market's cautious attitude towards the listing of technology companies has become more relaxed. At the same time, it also reflects a very optimistic view of the future development of technology companies.

As a leading company in the artificial intelligence sector, Cambricon's market value is naturally higher than other artificial intelligence companies. However, at this time, Cambricon's stock price was abandoned by the market, and it is more likely that the stock price bubble was exposed due to the sharp rise and fall of the stock price. At this time, some shareholders sold out, and since the company had sold most of its shares at the time of issuance, only a small part of the remaining shares were in the hands of investment institutions.

Under these circumstances, the possibility of Cambricon's stock price being abandoned is less than the possibility of selling during the shareholders' meeting. Therefore, when Cambricon's stock price is impacted, it only needs to wait for a period of time, and most institutions can regain the sold shares through dividends. This is also the reason why Cambricon's stock price remains at a relatively high level after the sharp decline.

Cambricon "will not lose money today, tomorrow, or in the future" - shareholders believe that there is hope to turn losses into profits in the future.

While Cambricon is losing money, there is no need to worry about the lack of profitability and consider it a reason for financial fraud. Cambricon has gone through a long period of accumulation during this time. Some people believe that Cambricon has used all the losses of these years to fill the gap in pre-listing publicity. However, if you think this way, it is not appropriate. It is just that Cambricon invested more funds in research and development at the beginning, and these aspects can give Cambricon more room for profit.Given that Cambricon has been incurring losses for many years, why is it still qualified to go public instead of being kicked out?

This is because Cambricon speaks with strength in the presentation of its financial data, and these financial figures have been audited by auditing firms, so there is definitely no issue on this point. On the other hand, it is also necessary to recognize that a company's operational status is not as simple as whether it is profitable or not. If a company is in a state of loss for a long time, it implies that there is a problem with the essence of the company's operations, and such a company is not qualified to go public.

For Cambricon, although it has been in a state of loss for a long time, it has not stopped production during this period but has invested more funds in research and development. This conclusion is drawn from the lenient attitude of the A-share market. Cambricon's losses are mainly in the area of research and development, and it can be said that the actual investment of funds is very large. However, there is no real problem in the use of funds, and its research and development output is evident.

After going public, Cambricon's losses have been decreasing year by year, and in 2022, it even attempted to turn losses into profits. This is because the company is continuously moving forward. Part of the reason for turning losses into profits is also in the reputation aspect. Mainly around 2019, the application of artificial intelligence began to rise year by year. Cambricon benefited from the development of new technologies but did not engage in marketing, so its reputation is still somewhat lacking.

Is it because of the delay in a certain business tender that institutions sold off their shares?

After this sharp drop in Cambricon's stock price, the company did not disclose the reason for the significant decline. However, according to some investors' speculations, on July 27th, some institutions may have received a tender message for a certain business, but later, this business did not fall into Cambricon's hands. Therefore, these institutions judged that the tender for this business might have been postponed again.

In this situation, these institutions are very likely to sell off their Cambricon stocks, after all, if they do not acquire these institutions, they will only wait for losses. In fact, there are institutions that choose to sell off, but most institutions already knew about this matter so many days ago, and later, many institutions still hold Cambricon's stocks, so these institutions will give up selling in this situation.

What exactly this business is, the institutions will not disclose to the public, after all, it has nothing to do with Cambricon, so everyone will question the decline in Cambricon's stock price. However, from the current situation, Cambricon's stock price has not experienced significant fluctuations, and the stock price has actually risen, which also indicates a higher possibility of institutional selling.

Conclusion

Artificial intelligence, as a rapidly growing field, is easily seen as promising, but there are still risks and uncertainties involved. Taking the sharp decline in Cambricon's stock price as an example, it is clear that these risks are exposed.Of course, we cannot generalize and conclude that Cambricon's prospects are not good just because of a sharp decline. After all, this is only temporary. However, we still need to continue to pay attention to Cambricon's operating conditions and its future plans, as whether it can restore trust in the stock market and other development issues is crucial.