(Bloomberg) -- SenseTime Group Inc. shares plummeted their most since April after short-seller Grizzly Research released a report accusing the Chinese AI company of inflating its revenues.
Grizzly cited documents and insiders describing how SenseTime engaged in what it called round-tripping, where it allegedly financed companies that in turn fed business to SenseTime. Shares tumbled as much as 9.7% in Hong Kong after the report, which SenseTime said “is without merit and contains unfounded allegations” in a filing to the exchange.
Grizzly Research had said in September that it was also shorting PDD Holdings Inc.
SenseTime, best known as a leader in computer vision, was among the first Chinese tech firms to receive government approvals to publicly roll out its own ChatGPT-like services. The company, earlier backed by Alibaba Group Holding Ltd., listed publicly in Hong Kong in one of the most highly anticipated debuts of 2021.
Co-founded by Massachusetts Institute of Technology alum Tang Xiao'ou, SenseTime was blacklisted by the US government in 2019 on accusations related to human rights violations in China's far-western region of Xinjiang. That has restricted its access to capital and crucial US tech components, which has been compounded in recent months by new curbs on the sale of advanced AI chips and chipmaking equipment to Chinese firms.
Alibaba and Japanese investor SoftBank Group Corp. have been whittling down their stakes in SenseTime over the past few months. China's AI arena has seen frenzied movement of capital and talent since the launch of ChatGPT a year ago, but the sluggish domestic economy and US chips restrictions have posed high hurdles for the industry.
(Updates with SenseTime response from second paragraph)
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