Alibaba Reduces Stake in AI Unicorn SenseTime, Shareholding Ratio Falls Below 9%

Chinese internet giant Alibaba has reduced its stake in SenseTime, an artificial intelligence software company, amid a rebound in the latter’s shares in Hong Kong. According to the Hong Kong Stock Exchange (HKEx) Equity Disclosure, Ali Baba sold 80 million shares of SenseTime at an average price of HK$1.8190 ($0.23) per share, and its equity ratio fell to 8.74%.

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On December 30, 2021, SenseTime was listed on the HKEx. Its share price has already reached HK$9.7. As of November 15, 2022, however, its share price was HK$1.71 and its market value was HK$57.232 billion ($7.304 billion).

SenseTime now faces great challenges in generating revenue. According the company’s financial reportin the first half of 2022, its revenue was 1.415 billion yuan ($200.8 million), down 14.3% year-on-year, and adjusted net loss increased 264 .9% to 2.564 billion yuan.

Revenues from the company’s smart business and smart cities segments, which are its core strengths, declined to varying degrees in the first half of this year, with the former dropping 12% and the latter 45%. Although the performance of smart life and smart cars increased to some extent in the first half of the year, their contribution to overall performance was limited due to their low share in revenue.

On the other hand, the costs of SenseTime remain high in all respects. According to its financial report, its R&D investment increased by 14.88% year-on-year, and its sales and other costs also continued to grow. At the same time, its net impairment of financial assets and contract assets doubled year-on-year.

The challenges aren’t unique to SenseTime, as persistent financial loss is one of the biggest issues facing many AI unicorns.

Many Chinese AI companies like Cambricon, CloudWalk Technology and Deep Glint, which have been listed on the stock exchange, have also suffered huge losses. In the first half of 2022, Cambricon lost 622 million yuan, CloudWalk lost 325 million yuan, and Deep Glint lost 12.56 million yuan. For Deep Glint, its loss was largely reduced from the loss of 56.01 million yuan in the same period last year, but its challenge to hold its ground and successive years of losses caused the market to cringe. worry about his prospects. The same goes for Megvii and CloudWalk Technology, which both posted losses.

Sallie R. Loera