Shares of Algorhythm Holdings Inc. (RIME) soared approximately 17% ahead of Friday's opening bell, building on a dramatic 29.9% rally during the previous session. The stock reached $1.26 in premarket activity after closing at $1.08 on Thursday, following volatile trading that saw it swing between $0.83 and $1.51 on heavy volume of around 50.5 million shares.
AI Disruption Fears Hit Transport Sector
The catalyst for the frenzy was the company's announcement that its SemiCab artificial intelligence platform enables logistics customers to manage 300% to 400% more freight volume without increasing staff levels. According to a company white paper, some operators using the technology now handle over 2,000 loads annually, compared to roughly 500 for typical freight brokers.
This assertion sent shockwaves through the transportation industry, with the Russell 3000 Trucking Index plunging 6.6% on Thursday. Major logistics firms including C.H. Robinson Worldwide and Landstar System saw significant declines as investors reassessed the potential impact of accelerated automation on industry margins and pricing power.
Market Psychology and Skepticism
Some analysts attributed the violent market reaction to what one Jefferies trader described as a "shoot first, ask questions later" mentality regarding AI disruption risks. Portfolio managers noted extreme anxiety in the sector, with one characterizing the sentiment as "Category 5" paranoia.
However, questions remain about the sustainability of Algorhythm's revenue model and whether the platform represents a genuine industry transformation. Established logistics companies have historically invested heavily in routing and optimization technology and may resist claims that a single platform could immediately overhaul industry economics.
The company, which previously operated in the karaoke equipment business before pivoting to logistics software, claims its platform can reduce empty "deadhead" truck miles by up to 70%. Notably, the announcement did not identify specific U.S. customers currently using the technology.
Traders are now watching to see if RIME can maintain its momentum during regular trading hours and whether the broader trucking and logistics sector can stabilize following Thursday's substantial decline.