Cerebras Opened at $350 -- Nearly Double Its IPO Price -- Then Pulled Back 20% the Next Day. Is Cerebras Stock a Buy or a Trap?
Written by Jack Delaney for The Motley Fool -> The stock price has experienced a sell-off since then. It offers the latest example of the risks involved with investing in a highly anticipated public offering. For investors looking for ways to invest in semiconductor stocks out
It offers the latest example of the risks involved with investing in a highly anticipated public offering.
For investors looking for ways to invest in semiconductor stocks outside of the usual suspects, last month offered an opportunity with the Cerebras Systems (NASDAQ: CBRS) initial public offering (IPO). With its giant chips, it's taking a differentiated approach from traditional semiconductor companies, like Nvidia .
Its IPO was priced at $185, with shares opening to the public on May 14 at $350. Shares fell 20% by the next day, which isn't surprising given the momentum trap associated with IPO investing .
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IPOs are enticing because they feel like a ground-floor opportunity , so it's easy to be lured in by the excitement. Cerebras specifically generated a lot of interest because it is an artificial intelligence (AI) play taking a different approach to chipmaking, as mentioned earlier.
Instead of relying on clusters of smaller semiconductors, Cerebras makes giant chips that are known for their speed. "For many workloads, Cerebras is up to 15 times faster than leading GPU-based solutions as benchmarked on leading open-source models," the company said in its IPO filing.
Its approach won it a multiyear contract with OpenAI valued at $20 billion, and has led to partnerships with Amazon Web Services and Meta Platforms . That approach is also driving rapid revenue growth, which has skyrocketed from more than $24 million in 2022 to $510 million in 2025.
Adding to the excitement is when a company prices above its IPO range, indicating heavy demand and making retail investors feel they were buying into positive momentum. That's what happened with Cerebras: It priced its IPO in a range between $115 and $125 on May 4, bumped that up to a range of $150 to $160, and ultimately exceeded expectations further by finalizing the IPO pricing at $185 per share.
