Algorhythm said its SemiCab platform can help customers scale freight volumes by up to 400% without adding headcount, sparking a selloff across U.S. logistics stocks.
- Algorhythm shares surged 262% over the past week, with the bulk of those gains coming on Friday.
- Retail traders discuss AI disruption in logistics, short squeeze and the involvement of a dubious lender.
- Stocktwits sentiment for RIME has remained ‘extremely bullish’ since Thursday.
Algorhythm Holdings (RIME), once an in-car karaoke supplier that last year pivoted the business to a freight management tech platform, stunned the market with a 222% rally on Friday. Now, investors are asking whether there’s any more juice left and what the path forward is for the stock.
Here are the top focus points with retail traders, according to chatter on Stocktwits.
AI Tool Drives Momentum
Last week, Algorhythm said its SemiCab platform had gone live and was helping customers scale freight volumes by 300% to 400% without increasing headcount.
SemiCab coordinates freight as a network, cutting empty miles by over 70% and tackling an industry issue where trucks run empty nearly a third of the time, costing more than $1 trillion annually.
Algorhythm stock shot up 30% last Thursday, while those of logistics companies, such as CH Robinson Worldwide, Landstar System, and RXO, dropped 15 to 25%.
Retail traders are closely following customer and analyst commentary on the SemiCab platform, they said, noting that AI distribution is coming to the logistics sector.
They also highlighted Freight Technologies as another company to watch in the AI logistics space. “Shipping AI combined with (a) tiny float,” a user said, describing the thesis for the stock.
Potential Short Squeeze?
Many bulls are betting on a massive short squeeze, confident that trapped short positions will lead to forced covering and significant price acceleration.
“Millions of shares were shorted last Friday, and most shorts are in the range of $5-$6 after hours,” said a user. “If we can hold more than $6 tomorrow, these shorts will scramble to cover or their brokers will force them to.”
Short interest in the stock was 7%, according to Koyfin. Notably, Algorhythm stock gained a further 30%, to $4.59, in Friday’s after-market session.
Concerns Over New Investor: Streeterville Capital
Some traders speculated whether the rally was driven by Streeterville Capital, which acquired $1.1 million of company stock in a private placement in December.
Streeterville is a Utah-based investment firm linked to John Fife, who was in 2020 charged by the Securities and Exchange Commission for operating as a “toxic lender” for years.
Fife and his companies would purchase convertible notes for small and struggling companies, convert those into shares at substantial discounts, and sell the resulting stock without being registered as a dealer — violating federal securities laws, according to the SEC.
“$RIME Caution is warranted because of the direct involvement of John M. Fife and Streeterville Capital, the notorious pump and dump specialist,” said a user on Stocktwits.
Another said: “The Streeterville / Rime issue is a valid concern however I don't expect them to sell substantial equity below an SP of at least $7.8… I could definitely see them pumping and dumping at some point but I think it is very unlikely at this valuation.”
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