China’s SenseTime AI refutes Grizzly Research’s allegation that it overstated its earnings.
Hong Kong — A well-known Chinese artificial intelligence company by the name of SenseTime has denied claims made by a research firm that it misrepresented its income. After short-seller Grizzly Research LLC released a report that caused its stocks to drop by almost 10%, the company sent a notice to the Hong Kong Stock Exchange stating that it “believes the report is without merit and contains unfounded allegations and misleading conclusions and interpretations.”
According to SenseTime, “it also demonstrates a lack of comprehension of the company’s financial reporting structure and business model, as well as a lack of careful reading of the company’s public filings.”
“Considering the appropriate course of action to take to safeguard the interests of all shareholders,” the business stated, in reference to its review of the allegations.
For its facial recognition technology, SenseTime is well-known. In August, it made available to the public a chatbot akin to ChatGPT.
According to Grizzly’s study, SenseTime inflates its sales numbers through revenue fabrication strategies. Additionally, it stated that SenseTime possessed control over other organizations that it had not declared on its balance sheet, implying that the publicly traded company lacks the necessary transparency regarding its operations.
SenseTime also replied in its statement that Grizzly was not familiar with its business strategy.
Reports from short-selling research firms like Grizzly typically concentrate on business corruption or fraud, including problems in bookkeeping and dishonest management. By placing “short” bets against those targets, the short-sellers can profit when the value of their shares declines.
Tuesday saw SenseTime’s Hong Kong-traded stock plunge as much as 9.7% in the morning before regaining some of the lost territory and closing 4.9% lower.
The U.S. government placed SenseTime on a blacklist in 2019 due to claims that the company’s face recognition technology was being used to persecute members of the predominantly Muslim Uyghur minority in northwest China’s Xinjiang province.
One of its well-known supporters, Alibaba, reduced its ownership of SenseTime from 5.29% to 3.15% in July. Another SenseTime supporter, Japan’s SoftBank Group, has sold off sizeable stakes in the business.
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