C3.ai (AI) stock tumbled on Tuesday after Kerrisdale Capital said it has sent a letter to the software maker’s auditor, Deloitte & Touche, regarding “serious accounting and disclosure issues.” Kerrisdale Capital disclosed a short position in AI stock last week.
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AI stock plunged 25.7% to 25.17 in afternoon trades on the stock market today.
Shares in C3.ai had surged more than 200% in 2023 amid buzz over OpenAI, ChatGPT and generative AI technology. C3.ai is one of many AI stocks to watch.
In a blog, Kerrisdale Capital said: “C3’s fiscal year ends on April 30, and we have asked Deloitte to review our letter in anticipation of its upcoming work conducting the company’s year-end audit.”
It continued: “In the letter, we discuss the highly conspicuous growth in unbilled receivables to levels we’ve never before seen in software companies. Opaque, confusing and highly concerning disclosures and financials related to the company’s related party and very large customer, Baker Hughes (BKR).”
AI Stock: IPO In Late 2020
Investor’s Business Daily contacted C3.ai for a response to the Kerrisdale Capital letter. C3.ai has not responded.
Short sellers bet the stocks will fall. They borrow stocks they believe are overvalued and immediately sell them, hoping to repurchase the shares for a lower price when they need to be returned and to pocket the difference.
Sahm Adrangi founded Kerrisdale Capital in 2009. Shortly after, the investment firm targeted Chinese companies it claimed were fraudulent. Kerrisdale also recently took a short position in Uranium Energy (UEC).
C3.ai ‘s initial public offering in early December 2020 raised $651 million.
Further, the software maker helps companies build artificial intelligence applications. It targets the energy, financial services and defense markets.
In addition, C3.ai holds a Relative Strength Rating of 99 out of a best-possible 99, according to IBD Stock Check-up.
With Tuesday’s loss, AI stock fell below a buy zone. It holds an entry point of 31.02.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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Source: https://www.investors.com/news/technology/ai-stock-c3-ai-tumbles-on-kerrisdale-capitals-letter-to-auditor/?src=A00220&yptr=yahoo