Tempus AI Plunges 5.13% Amid Regulatory Scrutiny and Sector Divergence

Summary
• Tempus AI (TEM) trades at $84.53, down 5.13% from its previous close of $89.10
• Intraday range spans $83.75 to $91.09, reflecting sharp volatility
• Turnover surges to 4.39% of float, signaling heightened short-term interest

Tempus AI’s sharp intraday decline has ignited market speculation, with the stock trading 5.13% below its previous close. The move follows a string of analyst downgrades, insider sales, and regulatory scrutiny linked to its recent healthcare equity study. While the biotech sector remains mixed, Tempus AI’s divergence from sector leader Illumina’s (ILMN) -2.45% slide underscores divergent investor sentiment.

Regulatory Scrutiny and Healthcare Equity Concerns Weigh on Tempus AI
The stock’s collapse stems from a confluence of factors: a 10-year study by subsidiary Ambry Genetics highlighting racial disparities in genetic reanalysis access, coupled with regulatory uncertainty. The study revealed 22% reanalysis rates for Hispanic/Latino patients versus 25% for White groups, raising questions about equitable healthcare delivery. While the company framed this as a call for proactive genomic programs, investors interpreted it as a potential regulatory risk. Compounding this, insider sales (e.g., Theodore Leonsis’ 33.65% stake reduction) and TD Cowen’s downgrade to 'Hold' signaled waning confidence in near-term execution.

Biotech Sector Mixed as Tempus AI Diverges from ILMN’s Slide
The broader biotech sector remains fragmented, with Illumina (ILMN) down 2.45% on concerns about sequencing pricing pressures. Tempus AI’s 5.13% drop outpaces ILMN’s decline, reflecting divergent investor perceptions. While ILMN’s struggles are tied to commoditization risks in genomic sequencing, Tempus AI’s move is driven by regulatory and equity-related concerns. This divergence highlights the sector’s bifurcation between data-driven precision medicine plays and traditional genomics firms.

Bearish Options Play and ETF Positioning for Volatility
• 200-day MA: $63.16 (well below current price)
• RSI: 51.29 (neutral territory)
• MACD: 2.63 (bullish) vs. Signal Line: 3.55 (bearish), creating bearish crossover
• Bollinger Bands: Price at 74.88–103.60 range, currently near lower band

Technical indicators suggest a short-term bearish bias, with key support at $83.75 (intraday low) and resistance at $91.09 (intraday high). The 52-week low of $31.36 remains a distant floor. While the 30D MA at $88.07 offers a near-term reference, the 200D MA divergence signals long-term caution. No leveraged ETF data is available for direct positioning.

Top Options Plays:
• TEM20251031P83 (Put):
- Strike: $83, Expiry: 2025-10-31
- IV: 83.81% (high volatility)
- Delta: -0.4201 (moderate sensitivity)
- Theta: -0.0723 (rapid time decay)
- Gamma: 0.0334 (responsive to price swings)
- Turnover: $54,371 (high liquidity)
- LVR: 21.65% (moderate leverage)
- Payoff: In a 5% downside scenario (ST = $79.80), payoff = $3.20 per contract
- Why: High IV and gamma make this ideal for a sharp decline, with turnover ensuring liquidity.

• TEM20251031P85 (Put):
- Strike: $85, Expiry: 2025-10-31
- IV: 81.71% (moderate volatility)
- Delta: -0.4891 (strong sensitivity)
- Theta: -0.0442 (slower decay)
- Gamma: 0.0349 (high responsiveness)
- Turnover: $144,238 (exceptional liquidity)
- LVR: 17.59% (balanced leverage)
- Payoff: In a 5% downside scenario (ST = $79.80), payoff = $5.20 per contract
- Why: High turnover and IV position this as a core short-term bearish play, with delta/gamma balance for directional bets.

Action: Aggressive bears should prioritize TEM20251031P83 for immediate volatility capture, while TEM20251031P85 offers a safer, longer-dated alternative. Both contracts align with the bearish crossover in MACD and RSI neutrality.

Backtest Tempus AI Stock Performance
Key findings on Tempus AI (TEM.O) after –5 % intraday plunges since 2022:• 103 qualifying events were identified. • Average close-to-close performance turns positive within one week; a 10-day holding window captures a mean +5.7 % gain vs +5.9 % for a passive buy-and-hold benchmark (difference not statistically significant). • Win-rate exceeds 50 % from day 6 onward, peaking near 59 % around day 27. • No individual day’s excess return over the benchmark reaches conventional significance levels at 95 % confidence. • Maximum favourable drift occurs around 26–30 trading days (+10 % average), but remains within normal volatility for TEM.O. • Strategy implication: buying TEM.O immediately after a ≥5 % intraday drop does not deliver a statistically reliable edge; risk-adjusted returns resemble simply holding the stock.To explore the full event-study curves, open the interactive panel below.Feel free to ask if you’d like alternate thresholds, longer/shorter holding windows, or risk-controlled strategy tests.

Position for Regulatory Clarity and Sector Rebalancing
The 5.13% drop in Tempus AI reflects a mix of regulatory uncertainty and sector-specific concerns, but technicals suggest a potential rebound from the $83.75 support level. Investors should monitor the 200-day MA ($63.16) as a long-term floor and the 30D MA ($88.07) for near-term direction. The sector leader Illumina’s -2.45% decline underscores broader biotech fragility, but Tempus AI’s divergence highlights its unique risks. Act now: Short-term bears should target TEM20251031P83 for a 5% downside scenario, while long-term holders may wait for a test of the 52-week low before re-entering.