Shares in C3.ai, an AI developer with a market cap of around $2.25bn, saw selling pressure this week – falling by 37% since the week began. It seems the selloff was caused by a letter written by Kerrisdale Capital to C3.ai’s auditor, alleging that the company finances represent “serious accounting issues” and “failing partnerships”.
Some analysts however have responded by saying that there is no real evidence to substantiate the claims, and Kerrisdale has already disclosed that they own a large short position in the company.
Tech’s zeitgeist
The AI industry has been very much in the spotlight in recent months, with ChatGPT prompting OpenAI’s competitors to make their own equivalents, such as Baidu’s ‘Ernie’ chat bot. But recently the space has also been coming under fire for safety concerns.
A petition signed by industry leaders including Elon Musk (who once owned a stake in its creator company OpenAI) has urged for an immediate pause to the development of high-spec AI, before it does damage to society. Although Bill Gates has said that it’s already too late for a “pause” to prevent issues needing to be addressed, and President Joe Biden has claimed that it is too early to necessitate government action on the issue.
Has the damage been done for C3.ai?
While the short term impact of the concerns can be seen in its share price, C3.ai has had a fairly positive year so far logging an 84% gain YTD. That being said, its shares are still down by 86% from its market highs in December 2022 – shortly after the stock was listed. The short seller letter also highlighted the fact that four different people have held the role of CFO since 2019, which could indicate deeper issues at play.
