SenseTime, the Chinese artificial intelligence (AI) firm, witnessed a sharp decline in its shares, dropping as much as 9.7% following allegations by U.S. short seller Grizzly Research, claiming the company inflated its revenue. Grizzly Research alleges SenseTime\u2019s involvement in a \u201crevenue round-tripping\u201d program, where funds are provided to customers, who then use the funds to purchase goods from SenseTime that may never be delivered. The short seller obtained this information from two court cases in China describing the alleged scheme.<\/p>\n
SenseTime Responds and Denies Allegations<\/p>\n
SenseTime responded to the allegations, stating that it is reviewing the claims and considering the appropriate course of action to safeguard the interests of shareholders. The company believes Grizzly Research\u2019s report is \u201cwithout merit\u201d and contains \u201cunfounded allegations and misleading conclusions.\u201d SenseTime asserted that the report demonstrates a lack of understanding of its business model and financial reporting structure.<\/p>\n
Background on SenseTime\u2019s Challenges<\/p>\n
Once considered one of China\u2019s most promising AI companies, SenseTime has faced challenges, including U.S. government sanctions. In 2019, the U.S. added SenseTime to the Entity List, restricting American firms from doing business with it, citing alleged links to human rights violations in China\u2019s Xinjiang region. Although SenseTime denied having business in Xinjiang, it faced obstacles, including a delayed IPO in Hong Kong in 2021.<\/p>\n
SenseTime\u2019s Limited Market and Technology Critique<\/p>\n
Grizzly Research emphasized SenseTime\u2019s limited market due to its U.S. government blacklisting, hindering any significant improvement in outlook. The short seller also questioned the competitive advantage of SenseTime\u2019s technology, asserting that it operates a \u201cfundamentally dead-ended facial recognition software business\u201d with limited chances of scalable future profits.<\/p>\n
Shares Drop 64% Below IPO Price<\/p>\n
SenseTime\u2019s shares closed at 1.37 Hong Kong dollars on Tuesday, marking a 64% decline from its IPO price of 3.85 Hong Kong dollars. Grizzly Research\u2019s critical assessment of SenseTime\u2019s technology and business model adds to the challenges faced by the Chinese AI firm, which is navigating both regulatory and competitive pressures.<\/p>\n","protected":false},"excerpt":{"rendered":"
SenseTime, the Chinese artificial intelligence (AI) firm, witnessed a sharp decline in its shares, dropping as much as 9.7% following allegations by U.S. short seller Grizzly Research, claiming the company inflated its revenue<\/p>\n","protected":false},"author":331,"featured_media":14629,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[2658,3197,158,4260],"class_list":["post-14656","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tech","tag-ai","tag-artificial-intelligence","tag-china","tag-sensetime"],"reading_time":"2 min read","_links":{"self":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts\/14656","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/users\/331"}],"replies":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/comments?post=14656"}],"version-history":[{"count":0,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts\/14656\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/media\/14629"}],"wp:attachment":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/media?parent=14656"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/categories?post=14656"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/tags?post=14656"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}