What happened
Shares of Veritone Inc. (VERI -4.93%) 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.
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So what
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."
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.
Now what
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.
