Continue Reading Below
Shares of Veritone Inc. (NASDAQ: VERI) popped 27.5% on Wednesday despite no company-specific news. There were no new analyst upgrades, market reports, press releases, or SEC filings that normally precede significant moves like this one.
Note, however, that this pop brings shares to almost exactly where they stood a week ago; Veritone stock has dropped by roughly the same amount over the past several days, in part after its CEO, Chad Steelberg, told Reuters the AI platform specialist may raise additional capital in the equity markets in 2018.
Even then, Steelberg's comments on the equity markets came toward the end of Veritone's multi-day decline, so they can hardly be faulted for the downward move.
To be fair, investors who've watched Veritone stock since its IPO at $15 per share in May (shares currently trade just below $38) are no stranger to its volatility. Veritone first began to climb after a bullish Barron's article featured the company in mid-August, driving it to nearly $75 per share over the next six weeks or so. But the stock subsequently plummeted more than 30% in a single day on Sept. 27, 2017, when short-seller Citron Capital sarcastically argued that it "should trade right back to $20."
Continue Reading Below
Two days later, Veritone popped nearly 30% again, when Roth Capital Analyst Brian Alger came to its defense, noting that the company is not only a leader in the AI space with its core media advertising customers but also is likely to use mergers and strategic acquisitions to expand its scope. That thesis is incidentally propped up by Veritone's current deliberations about raising more capital next year.
While many of Veritone's biggest moves in recent months had a clear catalyst, this isn't the first time the stock has seemingly popped without reason. And I suspect it won't be the last. In fact, this sort of volatility is often the norm for recently IPO'd, small-cap, thinly traded tech stocks -- a group to which Veritone most certainly belongs.
As a result, I feel compelled to repeat my preference for watching Veritone from the sidelines in these early stages, at least until it gets a couple of quarterly reports under its belt and shakes out this post-IPO volatility.
10 stocks we like better than Veritone, Inc.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Veritone, Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of October 9, 2017