SenseTime, a major Chinese artificial intelligence company known for its facial recognition technology, has rejected claims from a research firm that it inflated its revenue
“It also demonstrates a lack of understanding of the company’s business model and financial reporting structure, as well as a lack of thorough reading of the company’s public filings,” SenseTime said.The company said it was reviewing the allegations and “considering appropriate actions to protect the interests of all shareholders.”SenseTime is known for its facial recognition technology. In August, the company introduced a ChatGPT-style chatbot to the public.Grizzly's report alleges that SenseTime uses revenue falsification schemes to inflate its sales data. It also said SenseTime controls several companies that it did not disclose on its balance sheet, suggesting the listed company is not being as transparent about its operations as it should be.SenseTime also responded in its statement that Grizzly doesn't understand its business model.Reports from short-selling research firms like Grizzly typically focus on corruption or fraud in the business world, such as accounting irregularities and bad actors in management. The short sellers make “short” bets against these targets, allowing them to make money if their stock prices fall.Hong Kong-traded shares of SenseTime fell as much as 9.7% early Tuesday, but regained some lost ground to close 4.9% lower.SenseTime was blacklisted by the U.S. government in 2019 over allegations that its facial recognition technology was used to oppress members of the predominantly Muslim Uighur minority in China's northwestern Xinjiang region.In July, Alibaba, one of its prominent backers, reduced its stake in SenseTime from 5.29% to 3.15%. Japan's SoftBank Group, also a backer of SenseTime, has also sold significant stakes in the company.