AI stocks tumble after short-seller attack on C3.ai (updated)

Guardforce AI

05/04/2023 15:48

(Updates shares)
       April 5 (Reuters) - Artificial intelligence (AI) stocks
fell on Wednesday after a short seller alleged accounting issues
at retail darling C3.ai Inc  AI.N , dampening investor interest
in the group of small companies that have wildly outperformed
the market this year.
    Shares of C3.ai were down 10% in early trading, while those
of Thai security firm Guardforce AI  GFAI.O  fell more than 14%.
Data analytics firm BigBear.ai  BBAI.N  lost 7% and conversation
intelligence company SoundHound AI  SOUN.O  declined 4%.
    C3.ai was one of the trending stocks on investor-focused
social media platform Stocktwits.com.
    The company shed a quarter of its value on Tuesday, cutting
its market valuation to $2.80 billion, after Kerrisdale Capital
said the firm has "serious accounting and disclosure issues" in
a letter to its auditor Deloitte & Touche LLP.
    Kerrisdale had disclosed its short position in C3.ai last
month and accused the company of "poor customer traction,
failing sales partnerships and financial pressures." 
    "There is no evidence of any real wrongdoing or fraud in the
short-seller report, but it raises some concerns and investors
could benefit from more clarity on a few items," Canaccord
Genuity analyst Kingsley Crane said.
    "It is not necessarily a systemic risk and should not affect
other AI stocks near-term. These stocks are traded on (AI)
excitement."
    C3.ai did not immediately respond to a request for comment.
    The company's stock has more than doubled in value thanks to
a surge of investor interest in AI-related companies after the
viral success of OpenAI's ChatGPT. That compares with a 6.8%
rise in the benchmark S&P 500 index  .SPX .
    The rally has, however, slowed in recent days as concerns
rise over the use of AI and countries move to regulate its
applications.
    On Tuesday, U.S. President Joe Biden said it remained to be
seen whether AI is dangerous, but underscored that technology
companies had a responsibility to ensure their products were
safe before making them public.

 (Reporting by Tiyashi Datta and Yuvraj Malik in Bengaluru;
Editing by Shailesh Kuber and Anil D'Silva)
 ((tiyashi.datta@thomsonreuters.com;))