What the truck just happened to transport stocks?

Only in America could a karaoke equipment supplier pivot seamlessly into AI-driven logistics. And only this week could a study published by such a company wipe apparently tens of billions of dollars off the value of some of the world’s biggest airlines and freight brokers.

Now obviously ascribing market moves to a single factor is a tricky business. But it seems to be what we’re running with.

CNBC:

A new tool from AI company Algorhythm Holdings has made trucking companies the latest victim of the market’s AI jitters, adding to the historic sell-off in software stocks and real estate companies.

Bloomberg:

Logistics stocks plunged on Thursday as the group became the latest victim of the artificial intelligence “scare trade.” At the center of the selloff: a former karaoke company with a stock-market value of only $6 million. The little-known company is worth just a fraction of the value it knocked off of a constellation of others  — all of which were dumped by investors fearful of even the faintest threat posed by AI.

The Wall Street Journal:

The sell-off appears to have been sparked by a news release from a Florida firm called Algorhythm Holdings, which said its SemiCab unit had boosted customers’ freight volumes more than 300% “without a corresponding increase in operational headcount.”

FT Alphaville found Algorhythm Holdings’ head of investor relations in a state of amused confusion when we got in touch late on Thursday evening.

“It’s the biggest example of a tail wagging the dog ever,” said an exhausted but upbeat Brendan Hopkins, fresh from a call with a panicked Wall Street transport analyst.

The irony of a paper about supposedly transformative AI having been potentially picked up and run with by internet-combing algorithmic momentum strategies wasn’t lost on him, either.

“For all we know, AI is so self-supporting that it’s going to find something every day that makes AI seem like the best thing in the world,” Hopkins added.

Algorhythm’s share price ended the session up 30 per cent at $1.29, giving it a market cap of about $12mn. The violence of the sell-off its paper may have triggered across the rest of the freight sector can be summed up neatly by the following video of a SWAT team deathbot mauling an 18-wheeler*:

Or, moderately less excitingly, this chart:

Some content could not load. Check your internet connection or browser settings.

Fears around what AI might do to [insert industry here] have gone into overdrive over the past two weeks as investors have for the time being ditched their admittedly wildly successful ‘add leverage, buy everything’ approach in favour of selling first and asking questions later.

From MainFT:

Traders have seized on developments by little-known start-ups, triggering waves of selling for shares of incumbent players in the traditional financial services industry and beyond, from Charles Schwab to CBRE. Trucking stocks joined the selling on Thursday over threats to their freight brokerage businesses.

It’s fair to say that Algorhythm — née The Singing Machine, a world-leading purveyor of home karaoke systems — didn’t anticipate its white paper having quite the impact it seemingly did.

If anything, the company’s new AI product should have sent freight stocks higher, said chief executive Gary Atkinson:

“Our platform is net positive for all logistics players on the platform (the shippers, the carriers, the [third-party logistics] and [logistics service providers]). Reducing empty miles, we save shippers on cost, we keep the carriers more productive (no wasted fuel, drivers getting paid to drive empty), and we also have the nice added benefit of saving a massive amount of CO2 emission and added congestion on [the] road.”

Asked by FTAV which song he’d pick to sing to capture his mood, Algorhythm’s long-serving chief executive Gary Atkinson opted for a classic:

“It’s gotta be ‘Don’t Stop Believin’ by Journey after how wild today has been. Always believe in yourself and good things happen.”

*The SWAT team’s use of a Cyberdyne Systems-like robot to prise open the truck door in this case proved a tad excessive. It turned out the driver hadn’t responded to requests to pull over because he was suffering from a medical emergency and had blacked out at the wheel. There’s a market lesson in there somewhere, we’re just not sure what it might be.