The artificial intelligence (AI) revolution continued its remorseless advance in September, and more than a few pure-play stocks in the segment defied gravity during the month.

One was U.K.-based Rezolve AI (RZLV -3.76%), which concentrates on leveraging AI tech to power mobile commerce functions. Across September, its share price swelled by more than 33% thanks to several positive factors...although late in the month, there was a particularly negative development for the stock.

Person in car smiling while gazing at a smartphone.

Image source: Getty Images.

On the road again

Rezolve AI's stock rally coincided with a series of non-deal roadshows -- company presentations to potential institutional investors -- the company launched on Sept. 8. If done well, a roadshow can not only pique interest in a stock, it can draw money from deep-pocketed investors. It's possible at least some of the roadshow participants ponied up for Rezolve AI shares, as they ascended nicely from there.

This rise was aided by the company's announcement, mere days later, that it was rolling out an attractive-sounding new feature. It launched Visual Search, which as the name suggests is a service in which a smartphone user can capture any item for sale, and have Rezolve AI's system search kick up what the company calls a "dialogue-like shopping experience," for the good.

Company founder and CEO Daniel Wagner said of the service that all a user needed to do was "Point your camera at a dress, a sneaker, or a sofa and we'll take you from camera to checkout in seconds. This is how shopping is meant to work."

As September started to fade away, Rezolve AI announced that it had closed a $200 million private placement investment round, from what it said were institutional investors who ponied up capital in prior financing rounds. It said the placement was oversubscribed, and the incoming monies would be used for international expansion and potential strategic acquisitions, among other activities.

Short seller allegations

The negative factor for Rezolve AI came almost at the end of September, when a short seller named Fuzzy Panda Research published a scathing report on its operations and finances.

Fuzzy Panda wrote in the document that it held conversations with unnamed former employees of the company. Those individuals apparently told it that Rezolve AI was essentially still a mobile phone-related company that made the decision to "suddenly declare" itself an AI business.

The short seller went on to detail a raft of accusations against Rezolve AI and its management. Among other allegations, it claimed that its much-touted strategic partnerships with Microsoft and Alphabet unit Google are one-sided arrangements heavily in favor of those companies.

Regarding the Google tie up, Fuzzy Panda wrote that "Despite committing to pay Google $10 million to be in Google Play Store, app has zero reviews and not even a Google press release."

In a press release Rezolve AI published soon thereafter, it wrote that it "categorically rejects the misleading and inaccurate allegations contained in the report."

"The publication selectively misrepresents facts, recycles outdated information, and disregards our audited financials, Securities and Exchange Commission (SEC) filings, and the reality of our operations," the company added.