The Secoo Holding Ltd – ADR (NASDAQ: SECO) stock price soared 142.3% after revealing that it had been considering incorporating AI technology into its business to increase its customer conversion rate. The technologies it is considering are similar to ChatGPT.
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Investors reacted positively to the news, given the significant buzz generated by ChatGPT, which made Google announce that it would build a version of ChatGPT due to the positive reception the app has gotten globally. Many companies are now looking at how AI could benefit their businesses.
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However, the move higher on news that the company is considering using AI technologies in its business is not backed by any fundamental changes in the firm’s business operations; hence, it is highly likely to run out of momentum over the next few days.
While ChatGPT has opened investors' eyes to the potential posed by AI, many do not know that it took the team at OpenAI years to build the current version of ChatGPT, which people now love. In addition, many people are unaware of the work that goes into an AI from scratch.
Therefore, a company’s stock should not go up simply because it is considering using generative AI similar to ChatGPT within its customer acquisition systems. A company needs to have made tangible progress before we can attribute the benefits of AI to its stock price.
However, the markets are rarely rational, and right now, we are seeing massive gains in the stock prices of companies pursuing AI technologies driven by ChatGPT’s success. While some of these companies will create truly transformative AI technologies, most of them will not.
Investors should be careful chasing the next AI stock higher as they could suffer significant losses, especilaly if they buy at or near the top, just before such stocks crash back to earth.
Secoo Holdings claims to be a leading online-offline boutique lifestyle platform in Asia. The company says it has been exploring the application of intelligent content generation technology,w which it can apply to its luxury-related business.
The firm hopes to use the technology for pre-sale customer communication and consultation and to provide basic product information.
*This is not investment advice.
Secoo Holding (SECO) stock price.
The Secoo Holding (SECO) stock price soared 142.26% to trade at $4.07, from Friday’s closing price of $1.68.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.