The stock price of Chinese AI company SenseTime has plunged after surging 11% on Tuesday following the announcement of a series of new AI-powered products.
Chinese tech giants Alibaba Group Holdings and Japan’s Softbank Group Corp have both invested in the Chinese AI company.
SenseTime’s shares saw a boost by reaching HK$3.70, which indicated an increase of 11.1% from the previous close.
However, the company’s shares still remain below its initial public offering price of HK$3.85 on December 2021. Since then, the stock’s value has seen a free fall of 14.86% and is now trading for HK$3.15 at the time of writing.
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Similarly, shares of China’s Alibaba Group Holdings (9988.HK) rose by up to 3.8%, and Japan’s Softbank Group Corp (9984.T) climbed 0.5% on Tuesday.
The pump and the plunge
Both companies’ stock prices have been plunging since then, however.
The stock of Softbank Group opened at 5139 yen and closed at 5102 yen after hitting that day’s high of 51455 yen. It is currently trading for 5178 JPY, representing a loss of 3.09% in the daily timeframe as of press time.
Similarly, Alibaba Group was open at HK$100.200 on Tuesday and closed at HK$99.300 after reaching HK$101.500 earlier that day. Alibaba Group is now being traded for HK$95.400 per unit, indicating a 7.98% loss in the daily timeframe.
SenseTime CEO and co-founder Xu Li conducted a live demonstration of a chatbot called “SenseChat” on Monday. The chatbot was able to write an email and narrate a story about a cat catching a fish, prompted by questions. Additionally, it was able to script computer codes.
Just in: China AI firm SenseTime unveils ChatBot SenseChat 商量。Its overall big AI model is called SenseNov 日日新。The company is now doing a live demo in Shanghai, showcasing the AI's ability to draft emails and write codes. pic.twitter.com/Co875M8RjV
— Josh Ye (@ByJoshYe) April 10, 2023
These products were developed based on the latest version of SenseTime’s SenseNova big model, which the company has been working on for the past five years.
According to SenseTime’s other co-founder, Wang Xiaogang, big models are typically trained on massive datasets using powerful hardware.
At the event, SenseTime unveiled several other innovative products alongside SenseChat. These included an image generator, a digital platform for creating avatars, and a pair of complementary 3D modeling tools.
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Which led to a quick reaction in the stock price of the involved companies. However, the market got a quick correction too.
Draft regulation a factor?
The release of draft regulations by the Cyberspace Administration of China (CAC) for managing the development of generative AI products may have contributed to the recent plunge in SenseTime’s stock price.
A draft of the legislation was released on the same day, and the public has been invited to comment on it.
The proposed legislation demands that companies submit security assessments to authorities before launching their AI products to the public.
“Before providing services to the public that use generative AI products, a security assessment shall be applied for through national internet regulatory departments,” reads the draft law.
Regulations also require AI content to meet certain standards and providers to ensure the legality of their data used for training.
The regulator has mandated that service providers must update their technology within three months if inappropriate content is produced. These regulations may have raised concerns among investors, leading to the stock price drop.
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