iLearningEngines, Inc. (AILE) Stock Drop Lawsuit Investigation (2024)

We are investigating whether iLearningEngines, Inc. (NASDAQ: AILE) has violated federal securities laws by providing false or misleading statements to investors. This potential lawsuit seeks to help iLearningEngines, Inc. shareholders recover their losses.

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Why is iLearningEngines, Inc. (NASDAQ: AILE) stock dropping?

On Thursday, August 29, 2024, Hindenburg Research published a report claiming that “nearly all” of iLearningEngines’ revenue and expenses “seem to be run through an undisclosed related party, an unnamed ‘Technology Partner,’” and “the majority of iLearningEngines’ revenue doesn’t exist.”

The Hindenburg report states that iLearningEngines also has “no obvious industry presence, doesn’t name key customers or partners and does not appear to do the volume of business it claims.” For example, the company claims its Indian market has an annual revenue run rate of $216 million, but the amounts reported by its sole Indian subsidiary are actually around 99.4% less than what iLearningEngines purports, according to the Hindenburg report.

Following this news, shares of iLearningEngines plummeted over 54% in intraday trading on Thursday, August 29, 2024, causing significant harm to investors.

Will Joining a Potential iLearningEngines Class Action Lawsuit Cost Me Anything?

No. Participating in a potential securities class action lawsuit with our firm will not cost you anything out of pocket. If a lawsuit is filed and is successful down the line, the court has the discretion to award fair attorney’s fees out of a gross recovery.  

Recover Your Losses


Our Securities Lawyers Have a Winning Record Against Companies Like iLearningEngines

Our securities lawyers have recovered over a billion dollars on behalf of our clients against behemoths, such as Chase Bank, Mastercard, and Anthem Blue Cross Blue Shield. Read more about our results.

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Gibbs Law Group's Financial Fraud Experience

Gibbs Law Group’s financial fraud and securities lawyers have more than two decades of experience prosecuting fraud. Our attorneys have successfully litigated against some of the largest companies in the United States, and we have recovered more than a billion dollars on our clients’ behalf.

We have fought some of the most complex cases brought under federal and state laws nationwide, and our attorneys have been recognized with numerous awards and honors for their accomplishments, including Top 100 Super Lawyers in Northern California, Top Plaintiff Lawyers in California, The Best Lawyers in America, and rated AV Preeminent (among the highest class of attorneys for professional ethics and legal skills).
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iLearningEngines went public in April 2024 via a SPAC merger with Arrowroot Acquisition Corp. The August 29, 2024 Hindenburg Research report highlights that “iLearningEngines was borderline insolvent when it merged with a desperate SPAC sponsor” and had just “$800,000 in cash and $22 million in debt prior to the merger.” As of August 2024, iLearningEngines has lost over 85% of its value since it IPO’ed via the SPAC merger.

SPACs, or special purpose acquisition companies, are commonly known as “blank check” shell companies. SPACs provide an alternative to the traditional IPO process, and serve the primary purpose of raising investor proceeds to eventually acquire a private company. Investors typically buy into a SPAC before it announces, or even decides, which private company it will attempt to acquire.

While SPAC investors have the potential to realize significant gains, they are also much more vulnerable to market volatility and other types of fraud. Investors may be vulnerable to a variety of SPAC fraud by sponsors, including:

 

  • Misrepresenting material facts related to the SPAC or the company to be acquired;
  • Failing to properly investigate or conduct due diligence on the company to be acquired; or
  • Engaging in self-dealing or failing to disclose conflicts of interest with the acquisition company.

SPACs have recently come under SEC scrutiny and investor lawsuits against SPACs are on the rise. According to MarketWatch, many of these lawsuits allege SPAC directors failed to disclose sufficient information about the companies they intended to merge with.