What happened
After a two-day slide following an attack from short-seller Kerrisdale Capital, C3.ai (AI +2.01%) shares were rebounding today as CEO Thomas Siebel took the airwaves to defend the company and brush off allegations that the company's accounting was misleading.
As of 12:24 p.m. ET, the stock was up 10.8% on the news.
Image source: Getty Images.
So what
In an interview on Bloomberg Radio, Siebel said the letter did not contain "a word of truth," adding, "It was a very creative, very successful attempt at what appears to be successful stock price manipulation."
C3.ai also responded directly to Kerrisdale's allegations, which said among other things that the company was recording unbilled receivables in order to inflate revenue. In a statement, C3.ai said recording unbilled receivables is a "straightforward accounting matter that has been fully disclosed," adding that the practice is common at tech companies such as Salesforce and IBM. Siebel also denied that most of the company's business came from consulting services, as Kerrisdale alleged.
Finally, Siebel touted the company's future, saying, "When the Fed gets ready to take its foot off the brakes as it relates to dealing with inflation, I think you're going to see C3 as a very rapidly growing market-leading enterprise application software company that's profitable."
Those comments echo similar remarks he made in the third-quarter earnings report, as he said customer demand was picking up and that the company was on track to be cash positive and non-GAAP profitable by the end of fiscal 2024.
Now what
The response from Siebel seemed to be enough to persuade investors that the sell-off was a buying opportunity after the stock had fallen 38% over the two previous sessions.
Even if C3.ai can put the short-seller report behind it, the AI stock still faces a number of challenges, including a decline in revenue in its most recent quarter, wide losses, a steep valuation, and the threat of a recession.
Still, investors should be cheering the rebound, as it signals that the worst is over from the short-seller attack -- at least for now.
