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SenseTime denies Grizzly’s claim of inflated revenue

HONG KONG (AP) – SenseTime, a major Chinese artificial intelligence (AI) company, has rejected claims by a research company that it has falsely inflated its revenue.

“(SenseTime) believes the report is without merit and contains unfounded allegations and misleading conclusions and interpretations,” the company said in a notice yesterday to Hong Kong’s stock exchange, after its stocks tumbled nearly 10 per cent following the report’s release by short-seller Grizzly Research LLC.

“It also shows a lack of understanding of the company’s business model and financial reporting structure, and a lack of thorough reading of the company’s public filings,” SenseTime said.

The company said it was reviewing the allegations and “considering the appropriate course of action to safeguard the interests of all shareholders”.

SenseTime is known for its facial recognition technology. They launched a ChatGPT-style chatbot to the public in August.

Grizzly’s report alleges that SenseTime uses revenue fabrication schemes to inflate its sales data. They also said SenseTime was controlling several entities that it has not disclosed on its balance sheet, suggesting the publicly listed company is not as transparent about its business as it should be.

In a statement, SenseTime also responded that Grizzly did not understand its business model.

Reports by short-selling research companies like Grizzly usually focus on corruption or fraud in the business world, such as accounting irregularities and bad actors in management.

SenseTime’s Hong Kong-traded stock sank as much as 9.7 per cent early yesterday but recovered some lost ground and closed 4.9 per cent lower.

The booth for SenseTime during the World Artificial Intelligence Conference in Shanghai, China. PHOTO: AP