Tempus AI Plunges 4.91% as Shareholder Alert and New Cancer Assay Spark Market Turmoil

Summary
• Tempus AI (TEM) plunges 4.91% to $58.95 amid a shareholder alert and new xM assay launch.
• Intraday range narrows from $61.29 high to $57.86 low, signaling intense volatility.
• Options volume spikes on put-heavy activity, with 222 contracts traded at the 55-strike.
• Sector peers like Illumina (ILMN) also decline, but TEM’s drop outpaces broader biotech moves.

Tempus AI’s sharp decline has captured market attention as the stock sinks nearly 5% in volatile intraday trading. The move follows a shareholder alert and the launch of a new liquid biopsy assay, xM, which aims to revolutionize cancer treatment monitoring. With options activity surging and technical indicators showing mixed signals, investors are scrambling to decipher the catalysts behind this sharp reversal in momentum.

Shareholder Alert and New Product Launch Trigger Turbulence
The sharp intraday drop in Tempus AI’s stock appears to stem from two key triggers: a shareholder alert flagged in recent news and the company’s announcement of xM for treatment response monitoring (TRM). The alert, issued by Bronstein, Gewirtz & Grossman, likely raised concerns among institutional investors about potential legal or governance risks. Meanwhile, the xM assay, while positioned as a breakthrough in precision oncology, may have sparked skepticism among short-term traders who view it as a high-risk, high-reward play. The stock’s 4.91% decline suggests a lack of immediate confidence in the new offering’s commercial viability, despite its potential to capture a growing $154.25 billion immune checkpoint inhibitors market by 2030.

Biotech Sector Sinks as Tempus AI Outpaces Peers
While Tempus AI’s 4.91% drop is the sharpest in the sector, broader biotech indices also show weakness. Illumina (ILMN), a key competitor in genomic innovation, declined 2.04%, reflecting a sector-wide pullback. Leveraged ETFs like the ARK Genomic Revolution ETF (ARKG) and ARK Innovation ETF (ARKK) also retreated by 3.54% and 2.24%, respectively, indicating a flight from high-growth biotech plays. Tempus AI’s performance, however, stands out due to its product-specific news and legal alerts, which have amplified its volatility beyond the sector average.

Put Options and ETFs Highlight High-Risk, High-Reward Setup
• 200D MA: $54.21 (below current price)
• RSI: 56.47 (neutral zone)
• MACD: -0.02 (bearish cross)
• Bollinger Bands: 65.20 (upper), 60.18 (middle), 55.17 (lower)
• Kline pattern: Short-term bullish trend + bearish engulfing pattern (mixed signals)

Tempus AI’s technicals paint a conflicting picture. The bearish engulfing candle and negative MACD suggest short-term weakness, but the stock remains above its 200-day moving average. The key resistance zone lies between $58.33 and $59.48 (200D support/resistance), while the 60.18 Bollinger middle band acts as a critical pivot. ETFs like ARKG (-3.54%) and ARKK (-2.24%) offer leveraged exposure to the sector’s broader trend, but their declines underscore caution. The RSI at 56.47 suggests the stock is neither overbought nor oversold, leaving room for both sides of the market to act.

Top Options Picks:
• TEM20250808P58 (Put):
- Strike: $58
- Expiration: 2025-08-08
- IV: 96.84% (high volatility)
- Leverage: 17.47% (strong)
- Delta: -0.4212 (moderate sensitivity)
- Theta: -0.062965 (moderate decay)
- Gamma: 0.0394 (moderate responsiveness)
- Turnover: $204,355
- Why it stands out: This put option offers high leverage and liquidity, with implied volatility near 100% indicating strong bearish expectations. A 5% downside to $56 would yield a payoff of $2 (max(0, $58 - $56)).

• TEM20250808P60 (Put):
- Strike: $60
- Expiration: 2025-08-08
- IV: 91.83% (high volatility)
- Leverage: 13.96% (moderate)
- Delta: -0.5048 (high sensitivity)
- Theta: -0.033913 (low decay)
- Gamma: 0.0424 (strong responsiveness)
- Turnover: $50,507
- Why it stands out: This put’s high delta and gamma make it ideal for capturing sharp declines. A 5% move to $56 would yield a $4 payoff (max(0, $60 - $56)).

Hook: Aggressive bears should target TEM20250808P58 if the $58 support level breaks, while those expecting a rebound might short TEM20250808C58 (call) into a test of the $60.18 Bollinger middle band.

Backtest Tempus AI Stock Performance
The TEM strategy has historically shown positive performance after experiencing a -5% intraday plunge. The backtest data reveals that the 3-day win rate is 49.82%, the 10-day win rate is 56.73%, and the 30-day win rate is 65.45% following such a significant drop. Additionally, the strategy has a maximum return of 23.62% within 30 days, indicating potential for recovery and even gains after a steep initial decline.

Act Fast: Tempus AI at Pivotal Crossroads
Tempus AI’s 4.91% plunge has created a critical inflection point, with the stock teetering near its 200-day support/resistance zone. While the xM assay’s long-term potential remains intact, immediate market sentiment is bearish, amplified by the shareholder alert and sector-wide jitters. Investors should closely watch the $58.33–$59.48 range; a break below could trigger a cascade of put options like TEM20250808P58. Illumina’s -2.04% decline highlights the sector’s fragility, but Tempus AI’s unique catalysts—product launch and legal alerts—make it a high-conviction trade. Action step: Short-term bears should deploy the 58-strike put, while bulls might consider a tight stop-loss entry above $60.18.