SenseTime goes on the defensive after short seller report in latest setback for ailing Chinese AI champion
- The short-seller report accused the company of engaging in efforts to inflate its revenues through means such as ‘round-tripping’
- SenseTime issued a response that appeared to quell investors, saying the claims were ‘without merit’ and contained ‘misleading information’
SenseTime Group has fended off claims made in a short-seller report, accusing the Chinese artificial intelligence (AI) company of questionable business and accounting practices, in the latest stock hit for the once-promising market leader.
The report released Tuesday by short-seller firm Grizzly Research cited court cases, official documents and insiders accusing the company of engaging in efforts to inflate its revenues through means such as “round-tripping,” in which it financed companies to, in turn, purchase goods from SenseTime.
The AI firm’s stock tumbled as much as 9.7 per cent before closing about 5 per cent lower in Hong Kong on Tuesday, hitting its lowest level since October and provoking a response, in which SenseTime said the report was “without merit” and contained “misleading conclusions and interpretations”.
“The company’s board of directors is reviewing the allegations and considering the appropriate course of action to take to safeguard the interests of all shareholders,” the filing to the Hong Kong stock exchange read, adding that the company would make additional disclosures in due course.
The firm’s share price closed down 0.73 per cent on Wednesday.
The company first gained prominence in 2015 when it developed a facial recognition algorithm that was 99.55 per cent accurate. The breakthrough saw it become China’s leading provider of AI-powered facial recognition technology, used primarily in the public sector, including by the Chinese police.
Its business surged in 2020 as local governments in China implemented facial recognition technology as part of their efforts to enforce Beijing’s zero-Covid policy. By 2021, SenseTime claimed to be Asia’s largest AI software firm.
