What's Going On With C3.ai Stock?

C3.Ai Inc AI shares are trading higher Thursday. The stock plunged earlier in the week on the heels of a letter from short seller Kerrisdale Capital. C3.Ai shares appear to be bouncing back after the company issued a statement in response.

What To Know: Kerrisdale sent a letter to C3.Ai's auditor on Tuesday alleging inflated gross profit margins and misclassified revenue numbers, adding, "fictional accounting has no place in the public markets."

The letter touches on "highly conspicuous growth" in unbilled receivables and "concerning disclosures and financials" related to Baker Hughes. 

C3.Ai issued a response to the letter, noting that it appears to be an attempt to move the stock lower in order to profit from a short position.

"The Kerrisdale letter appears to be a highly creative and transparent attempt by a self-acclaimed short seller to short the stock, publish an inflammatory letter to move the stock price downward, then cover the short and pocket the profits," Kerrisdale said in the statement.

"Without comment on the legality of stock manipulation nor the innuendo replete in the letter, we will note that their allegation that C3 AI’s financial disclosures regarding Baker Hughes are somehow incorrect manifests a fundamental misunderstanding of U.S. GAAP accounting practices and principles."

In relation to the unbilled receivables, C3.Ai said it is a "straightforward accounting matter that has been fully disclosed." As it relates to Baker Hughes the company noted that it fully disclosed the receivables and even broke out the unbilled portion for transparency.

In response to gross margin claims, the company said they are "simply not true."

See Also: What's Going On With Alibaba Shares

AI Price Action: AI shares were trading near 52-week highs above $34 earlier this week ahead of the letter from Kerrisdale. Even with Thursday's gains, the stock is still down significantly over the past few trading sessions.

AI shares were up 9.67% at $23.14 at time of publication, according to Benzinga Pro.

Photo: Kohji Asakawa from Pixabay.