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Key Stats for Tempus AI Stock
- Today’s Price Change: -19%
- Current Share Price: $53
- 52-Week High: $91
- TEM Stock Price Target: $65
What Happened?
Tempus AI stock (TEM) plummeted nearly 19% on Wednesday following the release of a scathing short report from Spruce Point Capital Management.
The New York-based short-seller published a detailed analysis warning of 50%-60% potential downside risk for TEM stock, alleging significant concerns about the company’s management history, AI capabilities, and financial reporting practices.
The report takes particular aim at founder Eric Lefkofsky and his track record with previous technology ventures.
Spruce Point alleges that Lefkofsky has a pattern of promoting disruptive technology companies with bold claims that ultimately fail to materialize, while management exits early after making millions and leaving public shareholders with losses.
The report cites examples including Groupon, which declined 95% since its IPO, and Echo Global Logistics, both co-founded by Lefkofsky.
Central to the short-seller’s thesis is the claim that Tempus AI stock has misled investors about its AI capabilities.
Despite rebranding from Tempus Labs to Tempus AI before its June 2024 IPO to capitalize on AI hype, the company generated only $12.4 million, or 2% of total revenue, from AI applications in 2024.
Spruce Point argues that, ten years after its founding, Tempus has yet to generate a profit or positive cash flow, contrasting this with companies like Nvidia and Tesla, which achieved $ 2 billion+ in revenue and profitability within a decade.
The report also raises concerns about accounting practices, including a suspicious joint venture with SoftBank that allegedly allows Tempus to round-trip capital as revenue, and aggressive treatment of a $250 million Google Cloud debt that inflates adjusted EBITDA.
Additionally, Spruce Point questions recent deals with AstraZeneca and related-party entity Pathos AI, suggesting these arrangements involve financial engineering rather than genuine business expansion.
See Tempus AI’s full analyst estimates, earnings results, and earnings transcript (It’s free) >>>
What the Market Is Telling Us
The sharp 19% decline in TEM stock reflects investor concern about the serious allegations, particularly given its premium valuation relative to its financial performance.
Tempus AI stock had surged 95% year-to-date before the report, making it vulnerable to negative sentiment despite strong revenue growth.
However, the market reaction also shows the polarized nature of opinions on TEM stock. Wall Street analysts maintain an overweight rating with a consensus price target near $65, suggesting over 20% upside from current levels.
The company also has backing from influential investors like Cathie Wood, whose ARK funds have been accumulating Tempus AI stock.
Tempus AI dismissed the report as riddled with hypotheticals and inaccuracies, emphasizing its strong financial performance and growth prospects in bringing AI to healthcare.
Its recent Q1 earnings beat revenue expectations at $255 million versus $248 million expected, though it remains unprofitable with a $0.24 per share loss.
The dramatic price movement underscores the high-stakes nature of investing in early-stage AI healthcare companies, where valuations often depend heavily on future potential rather than current profitability.
Investors appear split between those viewing TEM stock as an overvalued hype stock and others seeing Tempus AI stock as a legitimate AI-powered healthcare disruptor.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
