07:58 AM EDT, 08/29/2024 (MT Newswires) -- iLearningEngines (AILE) shares were down more than 40% in Thursday's premarket activity after a short-selling blog critiqued its business model and revenue claims.

Hindenburg Research said the AI-powered education company was "borderline insolvent" when it went public via a business combination deal in April. "We suspect both the company's revenue and expenses are largely fake," Hindenburg said.

Nearly all of the company's revenues and expenses run through an undisclosed company that Hindenburg describes as a United Arab Emirates entity tied to iLearningEngines' chief executive. "We believe the entity is an undisclosed related party and that iLearningEngines has lied to the SEC," Hindenburg said.

"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," the report said.

iLearningEngines did not immediately reply to MT Newswires' request for comment.

Price: 1.7500, Change: -1.44, Percent Change: -45.14