Last year, Algorhythm was a struggling karaoke-machine maker...
A few weeks ago, it blew up the stock market.
Algorhythm used to go by "The Singing Machine Company." It got its start in the 1980s, and later claimed to be the global leader in portable karaoke machines.
But at-home concerts aren't the booming business they were four decades ago. The Singing Machine Company scraped together a few decent years in the 2010s... licensing to late-night host James Corden's Carpool Karaoke segment.
By 2024, though, revenue was down to just $24 million – a 13-year low.
That's when CEO Gary Atkinson did something drastic. He gave up on karaoke machines... and started chasing AI.
In the middle of 2024, The Singing Machine Company bought a tiny logistics business called SemiCab...
A few months later, it changed its name to the more ambiguous Algorhythm (RIME).
Nobody paid much attention to Algorhythm for the next year or so. It officially sold the karaoke business last August. But otherwise, it stayed pretty quiet as shares slid... and slid... and slid.
By November 2025, they'd fallen 99% – putting Algorhythm in danger of being delisted from the Nasdaq.
The company needed a miracle to boost shares... and a lot more eyeballs.
Suddenly, it was everywhere. Atkinson appeared on Fox Business, claiming Algorhythm's AI-logistics technology could quadruple freight productivity without additional staff. The Wall Street Journal picked up the story. So did CNBC and Bloomberg.
Nobody should have cared this much...
Algorhythm had a market cap of less than $20 million. Most folks hadn't even heard of it until the Fox Business interview.
But the market lost its mind.
Algorhythm's alleged software posed a direct threat to the transportation and logistics sector.
Logistics provider C.H. Robinson (CHRW) – a $20 billion-plus industry giant – plunged 15% in a day. J.B. Hunt Transport Services (JBHT), a trucking powerhouse worth roughly the same, dropped 5%.
The announcement wiped out a total of $17.4 billion in market value... all because of a $17 million former karaoke-machine maker.
Folks, situations like these shouldn't happen...
But they're becoming more and more common.
This year alone, new AI developments have caused several rounds of panic-selling in niche industries. Investors are terrified that tiny AI startups can replicate big Software as a Service ("SaaS") products. It's been dubbed the "SaaSpocalypse."
We saw a similar situation back in January, when AI juggernaut Anthropic updated its Claude Code and Cowork platforms. These tools can compete with ChatGPT... help automate programming projects... and even quickly develop software for the legal and medical fields.
The entire software sector sold off on the news. The S&P Software & Services Select Industry Index plummeted 20%. Many companies that took a hit had nothing to do with those niches.
Some of these updates could be game changers. They could disrupt some of today's biggest companies.
But it's far too early to say for sure.
And in the meantime, multibillion-dollar giants – and entire sectors – have no business selling off every time someone name-drops "AI."
Regards,
Joel Litman
March 16, 2026
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