C3.Ai Inc AI Shares remain under selling pressure Wednesday following a letter from the short seller Kerrisdale Capital claims “seriously accounting problems.”

Kerrisdale sent a letter to C3.Ai’s auditors alleging inflated gross margins and misclassified sales figures, adding, “Fictitious accounting has no place in the public markets.”

“In our opinion, C3.ai has employed extremely aggressive accounting to inflate its income statement metrics to meet sell-side analysts’ estimates for revenue and certain earnings metrics and to hide a material deterioration in its underlying operations,” like that letter specified.

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The letter addresses “very noticeable growth” in unbilled receivables and “regarding disclosures and financials” related to Baker Hughes.

C3.Ai reportedly responded to the letter by stating that it appeared to be an attempt to move the stock lower to take advantage of a short position.

Shares of C3.Ai were trading significantly lower when the letter was announced via a tweet before the market opens on Tuesday. It closed down 26.3% at $24.95 on Tuesday and has traded even lower since. The stock is still up more than 100% for the year, having benefited significantly from the rapidly growing 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 the RSI rises above 70.

C3.Ai is also heavily short with 25.86% of the float currently short Gasoline Pro Data.

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

The stock is down 4.09% at press time to $23.96.

Photo: Luke from Pixabay.