On February 12, Algorhythm Holdings issued a media release promoting a new whitepaper. In the 10-page paper, they talk about their approach to resolving one of the most systemic challenges in freight: unused capacity.
SemiCab, their AI-enabled solution, helps scale an approach they describe as “orchestrated collaboration” to increase network throughput by 2-3X. They claim to be able to reduce empty or “deadhead” miles by 70 percent.
It should have been a standard marketing effort. Instead, it triggered a selloff of logistics stocks and erased $17.4 Billion in market value. C.H. Robinson, Landstar, J.B. Hunt, railroads, airlines, and even European freight giants all felt the shockwave.
In this episode of Art of Supply, I look more closely at what happened and why.
Staggering Scale of Impact
Part of why this story has generated so much interest is that Algorhythm Holdings got its start in a very surprising place: karaoke.
Starting in 1982, The Singing Machine Company was a pioneering karaoke machine manufacturer. Over time, demand for dedicated karaoke machines started to decline thanks to mobile phone apps. The Singing Machine Company needed a new offering, and they ended up finding it in India.
In September of 2024, The Singing Machine Company acquired SemiCab, the AI-enabled software platform that sparked all of the trading activity last week. They announced the acquisition and a corporate rebrand to Algorhythm Holdings at the same time.
Algorhythm Holdings currently has no U.S.-based customers, but it is facilitating thousands of loads a month in India. And while this may be an impressive start, they have a long way to go before they will be able to prove they are ready for U.S. scale.
As The Wall Street Journal noted: “SemiCab founder and CEO Ajesh Kapoor said the firm is facilitating thousands of loads a month in India. By comparison, C.H. Robinson manages more than 100,000 shipments a day.”
The scale difference is staggering, and yet, a penny stock was still able to hit the logistics market hard enough to leave a mark.
C.H. Robinson was down 15 percent by close, and as much as 24 percent intraday. Landstar was down 16 percent, making Thursday its worst day ever. RXO was down 20.5 percent, and J.B. Hunt and XPO were both down about 5 percent.
Rainwater Equity portfolio manager Joseph Shaposhnik described the mood of the day this way: “The level of paranoia is category 5.”
But it wasn’t a bad day for everyone…
Algorhythm Holdings CEO Gary Atkinson said, “Never in my wildest dreams would I ever have imagined a day like today,” and he called it “almost like David versus Goliath.”
Algorhythm’s stock surged, at least relative to its starting point. At the close of trading on February 11th (before the news release) shares were $0.83. By Friday, February 14th, they were over $2.StocksToTrade reported the stock up 14.81 percent at one point on February 13th.
AI’s Ripple Effect
AI-driven efficiency claims will increasingly move and reshape markets, even before they change anything about the relevant operations. Significant increases in efficiency can destabilize pricing structures, and markets can (and will) overreact.
Companies must learn to separate press-release claims from demonstrated, scalable performance and find the patience to wait out volatile market reactions.
Uncertainty is not a passing phase, it is a condition of operating in an AI-accelerated economy. Freight markets felt the pain last week, software and commercial real estate felt it the week before. Before companies, consumers, and markets absorb the full impact of AI, there will likely be more shocks like this one.
