Hesai Group (NASDAQ:HSAI) shares are trading lower in the premarket session on Wednesday following allegations made by short seller Blue Orca Capital yesterday.
Today, in response to a report by Blue Orca, Hesai strongly denied the accusations. “The Company strongly disagrees with the allegations in the report and believes that the report is without merit,” Hesai said in a statement.
Blue Orca Capital called Hesai a “Chinese scam” and accused the company of falsely denying involvement with the Chinese military, citing evidence suggesting that Hesai’s lidar technology is used on military vehicles.
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The short seller also pointed out that the U.S. Department of Defense had labeled Hesai as a Chinese military company last year.
Additionally, Blue Orca raised concerns about Hesai’s financials, alleging that the company’s reported profitability last year was the result of a $20 million break-up fee from its largest customer, which had not been disclosed to investors.
The report also claimed that Hesai might be laying off up to 30% of its workforce.
This controversy follows a significant stock surge last week after Hesai announced a multi-year deal with Mercedes-Benz to supply lidar sensors. Meanwhile, Blue Orca expressed skepticism about the deal, noting that Mercedes had not publicly confirmed it and drawing attention to stock sales by Hesai executives following the price spike.
According to Benzinga Pro, HASI stock has lost over 10% in the past five days. The stock gained over 300% over the past year.
Investors can gain exposure to the stock via SPDR S&P Kensho Smart Mobility ETF (NYSE:HAIL) and SPDR FactSet Innovative Technology ETF (NYSE:XITK).
Price Action: HSAI shares are trading lower by 3.45% to $19.85 premarket at last check Wednesday.
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