C3.Ai Stock Continues To Fall: What's Going On?

C3.Ai Inc AI shares continue to face selling pressure Wednesday on the heels of a letter from short seller Kerrisdale Capital alleging "serious accounting issues."

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

"In our opinion, C3.ai has utilized highly aggressive accounting to inflate its income statement metrics in order to meet sell-side analyst estimates for revenue and certain profit metrics, and to conceal significant deterioration in its underlying operations," the letter stated.

See Also: Electronic Arts, Marriott International And 2 Other Stocks Insiders Are Selling

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

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

C3.Ai shares traded sharply lower when the letter was announced via a tweet ahead of Tuesday's market open. It closed Tuesday down 26.3% at $24.95 and has since traded even lower. The stock is still up more than 100% for the year as it has benefited significantly from the rapid growth of interest in AI, sparked by ChatGPT. 

C3.Ai appears to be overbought given its relative strength index (RSI) of 74.6, Benzinga reported. Stocks are usually considered overbought when RSI climbs above 70.

C3.Ai is also heavily shorted with 25.86% of the float currently sold short, according to Benzinga Pro data.

See Also: What's Going On With Palantir Technologies Stock Today?

AI Price Action: C3.Ai has a 52-week high of $34.68 and a 52-week low of $10.16.

The stock was down 4.09% at $23.96 at time of publication. 

Photo: Lukas from Pixabay.