Why Veritone Inc. Stock Popped Today

What happened

Shares of Veritone Inc. (NASDAQ: VERI) were up 19% as of 1:10 p.m. EDT Thursday despite no company-specific news for the recently public artificial intelligence (AI) pure play. Rather, the move extends Veritone's recent meteoric rise, which was initially spurred by a bullish Barron's article (may require subscription) around this time last month.

Veritone's stock plunged more than 45% between its IPO in mid-May (at $15 per share) and the day before the Barron's piece was released. Since that time, however, shares have skyrocketed more than 560% in what appears to be a combination of a likely short squeeze and increased visibility for Veritone stock among smaller retail investors.

So what

The Barron's article wasn't exclusively about Veritone. But it did note that the smaller company could bridge the gap between larger players in the AI space like Microsoft, Facebook, and Alphabet's Google -- all of which have massive computing power and troves of data at their disposal -- by building collections of AI engines and combining the data from its growing base of customers.

Veritone does appear to be succeeding to that end. As of the end of the second quarter, the company counted 38 customers and 169 total accounts on its platform, up from only five and eight, respectively, at the same time last year. Veritone also had 69 active third-party cognitive engines on its platform at the end of last quarter, up 19% from a year earlier.

Now what

That's not to say Veritone's incredible pop over the past month was completely merited. Personally, I tend to shy away from recently public stocks like this precisely because of their relative unpredictability. So while that might mean missing out on some easy gains if Veritone sustains its momentum over the near term, I don't think it's worth risking an equally violent pullback if short-term traders begin to take some profits off the table.

For now, I prefer watching Veritone's progress from the sidelines for the next few months. Exercising patience should allow plenty of time to better gauge whether Veritone is worthy of a long-term investment.

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