By Senad Karaahmetovic
Shares of C3.ai (NYSE:AI) are down almost 16% after short seller Kerrisdale Capital said it sent a letter to the AI company’s auditor to highlight accounting and disclosure issues.
Kerrisdale sent a letter to Deloitte to document “serious accounting issues.”
“Deloitte prepares audit opinion next month for FY 4/30. $AI’s fictional accounting has no place in the public markets,” the hedge fund said in a tweet.
In a letter to Deloitte, Kerrisdale’s CIO Sahm Adrangi said:
“In our opinion, C3.ai has utilized highly aggressive accounting to inflate its income statement metrics in order to meet sell-side analyst estimates for revenue and certain profit metrics, and to conceal significant deterioration in its underlying operations.”
The letter comes after the short seller said last month is short C3.ai shares. It alleged that the AI company “has risen from the ashes of its busted IPO based on the misconception that its self-proclaimed ‘AI leadership’ somehow positions it to benefit from Silicon Valley’s current tech theme du jour: generative AI as represented by media obsession ChatGPT.”
Today, Kerrisdale said that the AI’s financial statement does not reflect underlying business fundamentals and is instead used “as a tool to fool market participants by painting a false portrait of a company’s profit and loss.”
AI shares are up 160% year-to-date, boosted by the ChatGPT and generative AI frenzy.