C3.ai Stock Drops 26% Amid Accounting Allegations by Short-Seller

C3.ai, an enterprise software developer, saw its shares fall by 26% after short-seller Kerrisdale Capital alleged "serious accounting and disclosure issues" at the company. Kerrisdale accused C3.ai of using "highly aggressive accounting" to inflate its income statement metrics and conceal deterioration in its underlying operations. The company accounts for costs related to bespoke software production as research and development rather than cost-of-revenue to boost margins, according to Kerrisdale. C3.ai called the letter a "highly creative and transparent attempt" to diminish the stock price and said the accounting disclosures and financial statements referenced in the letter have been reviewed by its independent audit firm.