Brand Engagement Network Inc. (BNAI) shares went into free fall during Thursday's extended session, dropping nearly 80% before clawing back some losses in a move that had traders scrambling for explanations.

The Setup

Brand Engagement Network had been absolutely ripping higher lately, gaining more than 2,000% over the past month. The company says it provides enterprise AI solutions through text, voice, and avatar-based experiences.

Last week, the company announced a $2.05 million partnership with Nelson Mandela University in Africa, though that news alone doesn't explain the meteoric rise.

The Volatility

The stock has been trading on massive volume with wild price swings. Trading was actually halted Wednesday as shares surged violently higher despite no obvious company-specific catalyst. Thursday's afternoon crash followed a similar pattern—dramatic moves without clear news driving them.

The Red Flags

Here's what makes this particularly interesting: Brand Engagement Network has a tiny float of less than 5 million shares and serious short interest, with 29.2% of shares being short sold, according to market data. That's a recipe for explosive moves in either direction.

The stock was also recently flagged on Edwin Dorsey's StopNasdaqChinaFraud.com website as recently as Wednesday.

Price Action: BNAI shares were down 44% at $29.40 in after-hours trading, following a 16% decline during Thursday's regular session.