Yahoo Finance tech reporter Allie Garfinkle breaks down Spruce Point Capital Management's latest note critiquing artificial intelligence developer C3.ai and its leadership as the company finds itself at the center of the AI hype bubble. Yahoo Finance Live interviewed Spruce Point Capital Founder Ben Axler earlier this week.
Video Transcript
BRAD SMITH: Switching gears here. We got to talk C3 AI. It's written the hype around AI this year with shares up over 200% year-to-date. But not everyone is on board.
The AI company was the target of short-seller Spruce Point Capital highlighting potential . Concerns "Yahoo Finance's" Allie Garfinkle spoke with Spruce Point Capital's management founder yesterday. And she joins us now. Hey, Allie.
ALLIE GARFINKLE: Hi, Brad. So the job of a short seller, of course, is to question a stock. And I want to be careful here accordingly. However, I think it's important to give voice to some of short seller, Ben Axler's concerns here, especially given that C3 AI's stock is up a staggering 230% as of the moment I sat down in this chair.
The center of Axler's criticism really revolves around the idea of exaggeration. The idea that CEO Tom Siebel is exaggerating the company's revenue opportunities, partnerships, customer base. I asked Axler with Seana Smith yesterday, how far this goes? Here's what he had to say.
BEN AXLER: I'm not making any allegations of that. That's beyond my means. But I am, certainly, making the claim that I believe there's a lot of puffery going on here. I think there's a lot of exaggeration about, again, the tan, the addressable market, about how much money's been, invested, and, ultimately, about the prospects for the business.
ALLIE GARFINKLE: And Ben I also want to ask, if we're not alleging fraud, then what do you want to see? What is your message to Tom Siebel?
BEN AXLER: I think the message is get the customer straight. We've now seen multiple revisions about what they claim to be the customers.
ALLIE GARFINKLE: So I tested this out this weekend. I didn't take Ben Axler at his word. And I spent a weekend with some 8-Ks. And what I found was that, though, C3 AI is very candid about who some of its most high profile customers are, in a lot of cases, there's some linguistic gymnastics surrounding how many customers there really are.
Some examples from these filings-- things like, customer count is up year-over-year or we closed 126 agreements. Both of which are a little slippery. And I get that they're trying to show growth. And I really do think that there's still could be more transparency.
I was hoping to discuss this with C3 AI CEO Tom Siebel today on the show. He was scheduled to be here, but he canceled yesterday. I certainly am hoping for a reschedule, Brad.
JULIE HYMAN: As am I. We've talked to him before. So we'll see if we can get it organized once again. Thanks a lot, Allie. Appreciate it.
