Tempus Fugit, Investors Regret? Short Seller Targets AI Darling, Warns CEO Is 'Cash Out King'

Core Viewpoint - Spruce Point Capital Management has initiated a short position against Tempus AI Inc, raising concerns about the company's management and financial practices, suggesting potential significant downside risk for the stock [1][6]. Group 1: Management Concerns - The short seller criticized Tempus AI's founder and CEO Eric Lefkofsky, highlighting a history of promoting technology companies that ultimately disappointed investors, leaving shareholders at a loss [1][2]. - Lefkofsky and his partner Brad Keywell have been linked to previous ventures, such as Groupon and InnerWorkings, which faced significant financial restatements and declines in stock value [3]. Group 2: Financial Practices - Spruce Point raised alarms about "aggressive and suspicious" accounting practices at Tempus AI, including questionable adjusted EBITDA calculations and potential circular cash flows that inflate revenue figures [4]. - The company’s rebranding from Tempus Labs to Tempus AI has not translated into substantial AI-related revenue, with less than 2% of total revenue attributed to AI applications, raising doubts about the authenticity of its AI narrative [5]. Group 3: Stock Performance - Following the short seller's report, Tempus AI shares dropped 16.6% to $54.80, although the stock is still up approximately 62% year-to-date [7]. - Spruce Point warned of a potential downside risk of 50% to 60% for Tempus AI shares, indicating a significant correction may be forthcoming after a rapid rise in stock price earlier in the year [6].