Editor’s note: This story has been updated to include a statement from a Tempus AI ( TEM ) spokesperson.

Spruce Point Capital Management has announced a new short position against Tempus AI Inc. ( TEM ) . On Wednesday, the short seller raised concerns about the company’s management team.

What To Know: Tempus AI ( TEM ) shares are tumbling Wednesday morning. Shortseller Spruce Point targeted the Chicago-based company in a new report titled “The Tempest Surrounding Tempus AI.”

The firm blasted Tempus AI ( TEM ) founder and CEO Eric Lefkofsky‘s past. Lefkofsky and his partner Brad Keywell, Spruce says, have a history of promoting disruptive technology companies only to cash out. As a result, shareholders are left behind.

“We believe that Tempus Labs (now promoted as Tempus AI ( TEM )) is their next big technology promotion that is likely to disappoint,” the short seller said.

A spokesperson for Tempus AI ( TEM ) told Benzinga that the report is filled with inaccurate information.

“Some investment firms focus on shorting stocks and publishing content they think will scare off investors. We do not intend to respond to a report that is riddled with hypotheticals and inaccuracies and fails to address Tempus’ history of strong financial performance and impressive growth. We remain focused on delivering shareholder value, taking advantage of the enormous opportunity of bringing AI to healthcare, and helping patients live longer and healthier lives,” a Tempus spokesperson said.

Spruce Point highlighted the sale of Starbelly.com to HA-LO industries during the dotcom bubble. HA-LO went on to file for bankruptcy in 2001. A lawsuit reportedly revealed that Lefkofsky told his team to be “wildly positive” in its forecasts, among other strong commentary.

Lefkofsky and Keywell were also reportedly involved in promoting Groupon, which restated revenues by close to 50%. Groupon shares are down approximately 94.5% since IPO, according to Benzinga Pro. The duo also promoted InnerWorkings, which went down a similar path, the short seller said.

Spruce Point raised concerns about several Tempus AI ( TEM ) board members who have connections to previous fraud allegations. The short seller now sees signs of “aggressive and suspicious” accounting practices at Tempus, including adjusted EBITDA calculations that benefit from a novel debt forgiveness structure and potential circularity of cash flows between related parties that results in revenue for the company.

Spruce Point noted that although the company rebranded from Tempus Labs to Tempus AI ( TEM ), the company’s AI-related revenue remains minimal with less than 2% of total revenue coming from AI applications.

“This stark disconnect between the Company's branding and its financial reality raises significant questions about the substance of its AI narrative and whether the rebrand reflects true technological leadership or simply an effort to capitalize on prevailing market enthusiasm,” the short seller said.

Spruce Point also said it has serious concerns about the integrity of the company’s product as demonstration videos “call into question the accuracy of its data collection and AI services.”

The short seller warned investors that it sees potential downside risk of 50% to 60% in Tempus AI ( TEM ) shares following a swift rise in the stock so far this year.

Price Action: Tempus AI ( TEM ) shares were down 16.6% at $54.80 at the time of publication Wednesday. Despite Wednesday’s decline, the stock is still up approximately 62% year-to-date, according to Benzinga Pro.

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