SenseTime, a prominent Chinese AI firm, has refuted accusations from a research entity alleging revenue inflation.
In response to the report released by short-seller Grizzly Research LLC, SenseTime dismissed the claims as baseless and misleading. The company expressed that the report lacked comprehension of its business model and financial disclosures.
SenseTime disclosed its intention to investigate the allegations thoroughly to protect the interests of its shareholders.
Renowned for its facial recognition technology, SenseTime introduced a ChatGPT-style chatbot to the public in August.
Grizzly’s report asserts that SenseTime engages in revenue manipulation tactics to exaggerate its sales figures. Additionally, it highlights undisclosed entities controlled by SenseTime, implying a lack of transparency in its financial reporting.
SenseTime rebutted Grizzly’s claims, emphasizing a misinterpretation of its operational framework.
Reports from short-selling research firms like Grizzly typically focus on financial misconduct, including accounting discrepancies and governance issues. These firms take short positions against targeted companies, profiting from stock price declines.
Following the report, SenseTime’s Hong Kong-listed shares initially dropped by 9.7% but later recovered to trade 6.3% lower.
In 2019, SenseTime faced U.S. sanctions due to allegations of using its technology for human rights violations against the Uyghur minority in Xinjiang, China.
Alibaba, a key investor in SenseTime, reduced its stake from 5.29% to 3.15% in July. Similarly, SoftBank Group, another major investor, has divested a significant portion of its holdings in the company.
