C3.ai Stock Price Plunges by 25% due to Accounting Allegations from Short Sellers


C3.ai is a San Francisco-based software company that specializes in artificial intelligence (AI) and cloud-based application development. Founded in 2009 by Thomas Siebel, the company provides its customers with a variety of AI services and products, including software development, data integration, machine learning, and digital transformation solutions. C3.ai was recently moved from the New York Stock Exchange to the Nasdaq, an important milestone in both its own success and the industry’s growth.

Kerrisdale Capital Management is a short seller, or an investor who bets that a stock will drop in value. Recently, the firm published a letter to C3.ai’s auditor, Deloitte, accusing the software company of accounting and disclosure irregularities. This report concerned investigations into some potentially concerning practices within the company, such as an abnormally large amount of receivables, particularly from one particular customer (Baker Hughes Co, a large oil and gas company).

C3.ai specificly refuted the accusations, noting in a company statement that the Kerrisdale Letter appeared to be an attempt by a self-acclaimed short seller to manipulate the stock price downwards and then buy back the stock for a cheap price when the price has dropped. C3.ai added that Kerrisdale seemed to mispecify their allegations about C3.ai’s financial statements regarding Baker Hughes.

C3.ai has had an impressive showing this year, having gained 134% since the start of 2021. This signifies the growing interest and potential of AI-related applications, such as the popular ChatGPT chatbot generated by OpenAI. Development in this trend is likely to continue in the AI-driven software industry, driven by companies like C3.ai, despite Kerrisdale Capital’s claims.