Marpai (NASDAQ: MRAI) stock is down 36% premarket on Monday morning after that jump of 90% and more last week. This is not, we would submit, a terrible surprise as stock price rises without much sustenance behind them tend not to be sustained. It is indeed possible to trade the stock price changes in something like MRAI but we've always got to be very careful when doing so.
We looked at Marpai last week as it was rising strongly. Our advice was not particularly bullish it has to be said:
“We're deeply unsure this is worth a near doubling of a stock price in the one day though. Our assumption is therefore that this MRAI 90% rise is a bit of speculative froth. Investors are trading that fashion for AI rather than the particular and actual prospects of Marpai itself.”
The obvious enough implication of that being that we expected it to fade back to somewhere near the starting point soon enough. And Lo! It has come to pass:
Marpai stock price from NASDAQNote that we didn't think there was anything wrong with MRAI. Nor do we think there's any specific problem with Marpai today. We just didn't think that the realities of the business supported the excitement and price rise of last week.
As a company Marpai is in the perfectly respectable business of managing corporate own account health care systems. They apply AI - well, a bit at least - to managing the health of the employees in such plans. OK, perfectly sound line of thought at least. Of course whether it actually works is another thing. But it's a fine enough idea to try out.
But we thought that the jump last week was much more to do with people getting excited about AI than it was anything particular to this specific business. Therefore do the momentum trade, by all means - and it did rise above the price that we looked at. But here we are, mere days later, back and only 20 cents or so above the starting price. This is just what happens often enough, a bit of fashionable excitement, a stock price jump and then a fade away back to that starting point.
As long as we identify when this is taking place we'll be fine, can even make money off such movements. When a microcap moves with no news, well, that's not a proof, but as Marpaid shows, it's a between a hint and a clue.
