AI SPAC iLearningEngines Plunges 55% After Hindenburg Alleges “Artificial Partners And Artificial Revenue”

Shares of SPAC iLearningEngines, Inc. are down more than 50% heading into the cash open after short seller Hindenburg Research alleged that the artificial intelligence company has “artificial partners and artificial revenue”.

In the short seller’s second report this week, following its piece on Super Micro Computer, the firm headed by Nathan Anderson said that iLearningEngines “was borderline insolvent when it merged with a desperate SPAC sponsor that was quickly running out of time to get a deal done.”

The report focuses on an unnamed “Technology Partner” crucial to AILE’s business, stating “nearly all of company’s revenue and expenses (~96% of revenue and ~100% of CoGs in 2022) seem to be run through an undisclosed related party, an unnamed ‘Technology Partner’.”

The company then told the SEC the technology partner was not a related party in a comment letter, Hindenburg says. It alleges that it “unmasked” the partner to be a related party…one which, at one point, shared a listed address with AILE’s CEO’s home residence. 

Hindenburg writes:

• The American contact for “Technology Partner” Experion was listed as none other than the CEO of iLearningEngines, according to a web capture from 2020. A 2022 web capture listed the American address for Experion as the personal residence of iLearningEngines’ CEO.
• The latest Indian corporate records for Experion’s India affiliate list current iLearningEngines senior employees as directors and shareholders. UAE corporate records from June 2024 indicate Experion is partially owned by the brother of iLearningEngines’ senior director of channel partnerships.
• Earlier UAE corporate records from 2019 indicate Experion was headed by iLearningEngines’ President and Chief Business officer and its AVP of business development.
• Despite claiming to generate vast and growing revenue, iLearningEngines has no obvious industry presence, doesn’t name key customers or partners and does not appear to do the volume of business it claims.

“iLearningEngines claims its Indian market has an annual revenue run rate of $216 million. The financials for its sole Indian subsidiary reported ~$853,471 in revenue for its latest fiscal year, or ~99.4% less than iLearningEngines’ claimed revenue in the country,” Hindenburg wrote.

“We believe the majority of iLearningEngines’ revenue doesn’t exist, and that its relationship with the mystery ‘Technology Partner’ is merely a conduit for falsifying its financials. We do not expect it will remain a public company for long,” the short seller wrote.

You can read the full iLearningEngines report here. 

Yesterday, shares of Hindenburg target Super Micro shares plunged more than 20% on news that the company was delaying its 10-K filing for FY 2024.

In a report released on its website Tuesday morning, the short seller alleged that the semiconductor/server company, which has seen its stock skyrocket over the last few years during the AI bubble, could be engaged in accounting manipulation and self dealing among family members.