Ex-karaoke machine maker wipes out trucking stocks on claims of efficient AI platform

Logistics stocks had one of their worst days ever after former karaoke-machine maker Algorhythm Holdings claimed its AI platform could improve trucking efficiency. The selloff became another example of investors reacting sharply to AI’s potential impact on traditional industries. Algorhythm’s shares, meanwhile, rose about a third on the day.

Thursday was one of the worst days ever for logistics stocks, the Wall Street Journal reported. The Dow Jones Transportation Average, which includes trucking companies, fell 4% – its weakest performance since April of last year, when Trump rolled out his trade agenda and rattled markets. Of the 20 companies in the index, 17 ended the session lower on Thursday, collectively losing billions of dollars in market value.

Shares of logistics firm C.H. Robinson Worldwide fell 14.5%, their steepest one-day decline in more than six years, notes MarketWatch. Shares of freight broker RXO dropped 20.5% to their lowest level since November, while XPO declined nearly 6%. Shares of J.B. Hunt Transport Services slid about 5%.

Companies not directly tied to trucking were also affected, the Wall Street Journal pointed out, with the stock of Expeditors International of Washington, which arranges logistics by air and sea, plunging 13.2%.

The selloff followed a press release from Algorhythm Holdings, an AI developer with a market capitalization of about $6.2 million that was previously known as Singing Machine, a manufacturer of karaoke machines. The company claims its SemiCab platform could scale freight volumes by 300-400% without a corresponding increase in headcount.

Three days earlier, on Monday, Algorhythm stated the platform could reduce empty miles for trucks, citing its white paper.

Algorhythm shares surged nearly 30% on Thursday. In early trading on Friday, the stock added about 19% more.

The selloff is one of the clearest examples of the “sell now, ask later ethos” sweeping financial markets in the AI era, the Wall Street Journal wrote. In recent sessions, concerns about AI disruption have also weighed on credit card companies, financial advisers, insurance brokers, and legal and financial data providers, just to name a few.

“Anything knowledge-based is susceptible, and so are the transport companies that are more about the planning and less about the actual moving stuff,” Interactive Brokers Chief Strategist Steve Sosnick was quoted by MarketWatch as saying.

“People are looking for an excuse to sell, and maybe this was it,” Brendan Hopkins, who works in investor relations at Algorhythm, told the Wall Street Journal. He said the company was surprised by both the level of attention to its press release and the market reaction, with calls coming from analysts at Wall Street banks and financial firms around the world.

Algorhythm published the research data on its website, but on Friday morning, European time, it could not be accessed due to heavy traffic.  

Algorhythm CEO Gary Atkinson said he was surprised the white paper triggered such a strong reaction in transport stocks. “When names like C.H. Robinson are dropping billions of dollars of market cap, it’s quite staggering,” he said, according to the Wall Street Journal. 

The selloff prompted C.H. Robinson to issue a statement saying it has been a leader in AI for more than a decade and believes the technology will strengthen its performance and widen its competitive advantages.