C3.ai CEO Tom Siebel Calls Short-Seller Report ‘Stock Price Manipulation’

(Bloomberg) — C3.ai Inc. Chief Executive Officer Tom Siebel said the short-seller letter from Kerrisdale Capital that caused his company’s shares to plummet 38% the past two days was stock price manipulation.

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The letter contained “not a word of truth,” Siebel said Wednesday in an interview with Bloomberg Radio. “It was a very creative, very successful attempt at what appears to be successful stock price manipulation.”

Kerrisdale on Tuesday alleged C3.ai engaged in “aggressive accounting to inflate its income statement.” The software company had benefited from a recent spike in investor interest in artificial intelligence, and the stock had more than doubled before the rout.

Siebel said Kerrisdale Capital made $100 million to $200 million on the short position. “I mean the guy succeeded, sometimes crime pays,” Siebel said, adding that the short-seller was one of the firms under investigation by regulators.

Kerrisdale Chief Investment Officer Sahm Adrangi said the profit figure Siebel provided isn’t accurate, but declined to disclose any gain or loss on the short position. Kerrisdale is one of about 30 short-selling firms being probed by the US Justice Department over potential trading abuses. Adrangi said earlier this year that the firm hadn’t been contacted by any government agencies regarding investigations.

Tuesday’s letter alleged that C3.ai’s business is more oriented toward low-margin consulting than the company has disclosed, and cited climbing unbilled receivables from its largest customer, Baker Hughes Co., as a red flag. Siebel said more than 80% of C3.ai’s revenue is from software subscriptions rather than consulting, and unbilled receivables are commonly found at peers such as Salesforce Inc. to International Business Machines Corp.

In a statement Wednesday, the company called unbilled receivables a “straightforward accounting matter that has been fully disclosed.” It added that Kerrisdale’s report that the Baker Hughes deal gross margin is over 99% is inaccurate, and the number has never been disclosed.

C3.ai is focused on the long term and seizing a leading share in the enterprise AI market, Siebel said. “When the fed gets ready to take its foot off the brakes as it relates to dealing with inflation, I think you’re going to see C3 as a very rapidly growing market-leading enterprise application software company that’s profitable.”

–With assistance from Madison Mills.