Richtech Robotics Inc. (NASDAQ: RR) shares extended a sharp selloff into Friday morning, hammered by a critical report from Hunterbrook Media that casts doubt on the company’s recently touted relationship with Microsoft. The volatility comes at a precarious moment for the robotics firm, which is simultaneously grappling with significant insider selling and concerns over its financial filings. The stock, which is currently trading around $2.75, has dropped 10% over the past week as investors reassess the company’s valuation and transparency.
Microsoft Collaboration Under Scrutiny
At the heart of the decline is a dispute over how Richtech characterized its interaction with the tech giant. While Richtech had previously announced a “close collaboration” involving Microsoft’s AI Co-Innovation Labs to enhance robotic systems, Hunterbrook alleges the reality is far more mundane. According to the report, Microsoft described Richtech’s participation as a standard customer engagement with “no commercial element,” directly contradicting the narrative of a strategic partnership.
The market reaction to the initial announcement had been explosive, temporarily lifting Richtech’s market value by more than $370 million. However, the report suggests this valuation spike may have been opportunistic; the very morning after the announcement, Richtech unveiled a $38.7 million private placement involving the sale of 8.5 million Class B shares. This timing has fueled concerns that investors may have overestimated the significance of the Microsoft tie-up just before the company diluted its stock.
Former Executive Liquidates Stake
Adding to the negative sentiment is the complete exit of a former company insider. Matthew G. Casella, a former manager at Richtech, liquidated his entire direct stake in the company this week via two separate transactions. According to SEC filings, Casella sold 40,000 shares on February 13 at roughly $2.99 per share, followed by another 20,000 shares on February 17 at $2.79.
The sales netted approximately $175,600 and left Casella with zero direct holdings in the firm. While insiders sell for various reasons, a complete liquidation by a former manager during a period of high volatility often signals a lack of confidence to the broader market.
Financial Health and Filing Delays
Beyond the headlines, the company’s fundamentals present a complex picture. Richtech recently reported fiscal 2025 revenue of approximately $5 million against a stinging net loss of nearly $15.8 million, highlighting a heavy cash burn rate that necessitates frequent capital raising. The company is also facing scrutiny for a delayed 10-K filing, which could complicate future fundraising efforts and potentially invite Nasdaq deficiency notices.
There are, however, some operational bright spots. In its first-quarter update for fiscal 2026, Richtech reported that revenue from its “Robots-as-a-Service” (RaaS) segment climbed 31% year-over-year to $0.3 million. The company also maintains a strong gross profit margin of nearly 56% and currently holds more cash than debt. To streamline operations, Richtech has reorganized its business into three strategic pillars: commercial robotics, industrial robotics, and data services.
Short Seller Pressure
The Hunterbrook report is not the first time Richtech has faced skepticism. Short seller Capybara Research previously labeled the company a “China Hustle,” alleging it relies on rebranded robots and fabricated partnerships. Hunterbrook Capital, an affiliate of the media outlet that released the new report, has disclosed a short position in RR, adding further downward pressure on the stock.
With the company appearing overvalued by some metrics and facing a credibility crisis, all eyes are now on the upcoming quarterly earnings report, expected on February 25. Investors will likely be looking for clarity on the Microsoft relationship and a path toward stabilizing the company’s financial footing.
