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Tim Culpan

SenseTime's Challenges Are Anything But Artificial

It’s never a good sign when shares tank the moment a lockup expires. Investors appear to be losing faith that the company can stay at the cutting edge of a fast-moving field.

Less imposing than it looks.

Less imposing than it looks.

Photographer: Qilai Shen/Bloomberg

SenseTime Group Inc. shares took a battering Thursday, dropping as much as 51% and falling below the company’s December listing price. The expiry of a lockup on shares amid low trading liquidity is a logical explanation, but that masks broader challenges for the Chinese artificial intelligence company. 

Early backers and cornerstone investors, who have been holding shares for years, are naturally inclined to cash out. But a key reason to sell a stock is if you think there’s limited upside. A slowing Chinese economy, US sanctions, and the company’s heavy reliance on government contracts don’t bode well.