The security is looking to extend yesterday's steep losses
Kerrisdale Capital is taking aim at C3.ai Inc (NYSE:AI). In a letter to auditor Deloitte & Touche, the short seller alleged the artificial intelligence (AI) name has used aggressive accounting tactics to inflate income statement metrics in order to meet sell-side analyst estimates for revenue and profit, and to conceal significant operations deterioration.
Comments also came from U.S. President Joe Biden, who said AI "could be" dangerous and placed responsibility on developers to ensure these products are safe before hitting the public. Investors seem less worried, though, per the action we're seeing in the options pits this morning.
In turn, C3.ai stock is looking to extend yesterday's pullback off their April 3, one-year high of $34.68, last seen down 8.7% at $22.79. However, a familiar floor at the $20 area looms, ready to contain any drastic bear gaps. Year-to-date, AI still sports an impressive 114% lead and this week's pullback could be an ideal entry point for bulls.
Analysts already lean bearish toward the security, with nine of the 11 in question calling it a "hold" or worse. This leaves ample room for upgrades in the coming weeks. Plus, the short interest is up 12% in the last two reporting periods, and the 24.81 million shares sold short make up a whopping 25.5% of AI's available float.
Overall options volume is today running at triple the intraday average, with 17,000 calls across the tape already. The most popular contract is the weekly 4/14 35-strike call, which indicates options traders are feeling optimistic.