Shares of iLearningEngines, a recently public company specializing in artificial intelligence (AI), took a dramatic plunge on Thursday after a scathing short report from Hindenburg Research cast doubt on the company’s financial integrity and its position within the AI sector.
Hindenburg, led by Nathan Anderson, released a report labeling iLearningEngines an “artificial intelligence SPAC with artificial partners and artificial revenue.” The report, which alleges that a significant portion of iLearningEngines’ revenue and expenses are fabricated, claims the company was on the verge of insolvency before merging with a SPAC in April.
The short report specifically targets the company’s relationship with an unnamed “technology partner,” claiming that this partner, identified as Experion Technologies, is actually a related party and that iLearningEngines misled the Securities and Exchange Commission (SEC) about this connection. Hindenburg further criticizes iLearningEngines’ lack of listed key customers or partners, questioning the legitimacy of the company’s financial claims.
In response to Hindenburg’s allegations, iLearningEngines vehemently denied the accusations, calling the report “misleading, speculative, and filled with innuendo.” The company emphasizes that it is committed to its business plan and will not be swayed by what it considers typical short seller tactics.
Despite iLearningEngines’ rebuttal, the stock price plummeted over 53% by the end of the trading day, reflecting investor concern and the potential impact of the allegations on the company’s future. The situation highlights the significant impact that short seller reports can have on companies and the importance of transparency in financial reporting. It remains to be seen how iLearningEngines will navigate these challenges and whether it can regain investor confidence.
