SenseTime Shares Plunge Following Grizzly Research Accusations of Inflated Revenues

According to Yahoo News, SenseTime Group Inc. shares experienced their largest drop since April after short-seller Grizzly Research published a report accusing the Chinese AI company of inflating its revenues. Grizzly Research cited documents and insider information, alleging that SenseTime engaged in round-tripping, a practice where it financed companies that subsequently provided business to SenseTime. Shares fell as much as 9.7% in Hong Kong following the report. SenseTime has denied the allegations, stating that the report is without merit and contains unfounded claims. SenseTime, a leader in computer vision, was among the first Chinese tech firms to receive government approval for the public rollout of its ChatGPT-like services. Previously backed by Alibaba Group Holding Ltd., the company went public in Hong Kong in one of 2021's most anticipated debuts. Co-founded by MIT alum Tang Xiao'ou, SenseTime was blacklisted by the US government in 2019 due to accusations related to human rights violations in China's Xinjiang region. This has limited the company's access to capital and essential US tech components, further exacerbated by recent restrictions on the sale of advanced AI chips and chipmaking equipment to Chinese firms. Alibaba and Japanese investor SoftBank Group Corp. have been reducing their stakes in SenseTime over the past few months. Despite the rapid movement of capital and talent in China's AI sector since the launch of ChatGPT a year ago, the sluggish domestic economy and US chip restrictions have created significant challenges for the industry.