SoundHound AI enters the week with its first meaningful short covering in months — yet the lending market remains as tight as it has been all year, creating an unusual split between what shorts are doing and what the borrow market is telling them they can do.
The headline shift from last week's note is a reversal in short interest direction. Positions fell to 38.1% of the free float by June 18, down from 38.9% a week earlier — the first sustained decline in several weeks after shorts had been actively rebuilding through most of June. That is roughly 3.6 million shares net covered over the week. The move is modest rather than dramatic, and the ORTEX short score barely budged, holding at 80.0 versus 80.1 last week. Still, the direction has changed. Shorts pressed the position when the stock was sliding; now that SOUN has recovered 1.7% on the week to $7.12, some of that conviction is being trimmed. The borrow market, however, tells a different story entirely. Availability has been at 0% continuously — every single share in the lending pool lent out — for the better part of six weeks, and that has not changed. Cost to borrow has fallen sharply from its May peak near 34%, settling around 10.5%, but the pool itself remains fully drawn. A 0% availability reading, sustained this long, means any new short position requires locating stock outside the conventional pool. That is a structural constraint on further short building even if sentiment sours again.
Options positioning adds another layer to the contrast. Call demand has risen enough to push the put/call ratio to 0.40, well below its 20-day average of 0.43 and close to its 52-week low of 0.31. Roughly 1.4 standard deviations below the recent mean, the reading reflects more bullish positioning than usual — consistent with the partial short covering, and consistent with last week's pattern where options traders were leaning constructive even as shorts rebuilt. The two signals are now pointing in the same direction for the first time in several sessions: less aggressive short positioning, more call exposure. That does not make SOUN an easy long — 38% short interest on a fully drawn borrow pool is still extreme by any measure — but the balance has shifted slightly.
The Street offers limited fresh guidance. The most recent analyst action on record is DA Davidson's Gil Luria maintaining a Buy with a $14 target in late April, and HC Wainwright trimming its target to $20 in early March. The consensus mean sits at $14.25 against a $7.12 close — implying the Street's bull case is roughly double the current price — but that data is now 42 days stale and should be treated with caution. The bear case, as Piper Sandler's Neutral rating and $9 target reflects, centres on a valuation that still prices in near-flawless execution: roughly 30x forward revenue on a company still generating deeply negative earnings. The EPS picture is improving on momentum metrics — the 12-month forward EPS year-on-year growth factor scores in the 98th percentile — but the actual earnings remain negative, with a trailing PE of -55 and EV/EBITDA of -68. Quality scores remain weak at a Piotroski F-score of 3 and negative ROA, as flagged in the prior stock score note.
Insider activity is worth noting, though not alarming in isolation. On June 15, five executives including CEO Keyvan Mohajer sold shares at $7.46 — Mohajer shifted roughly $944k worth, the COO around $485k. These were clustered sales at the same price on the same day, a pattern consistent with pre-planned 10b5-1 programmes rather than discretionary conviction selling. The 90-day net insider figure is actually positive at +576k shares net, because prior period buying more than offsets recent sales. BlackRock added roughly one million shares through May, now holding 7.5% of the company — a meaningful passive accumulation at these levels.
Among peers, ARQQ stood out this week with a 78% gain, while C3.ai and FIVN each fell more than 6-7%. SOUN's 1.7% weekly gain puts it in the middle of the correlated-peer pack, neither leading nor lagging the AI software cohort in any decisive way. The next scheduled earnings event is August 6 — the prior two prints saw the stock fall 2% and 5% on the day respectively, with mixed five-day follow-through — making the weeks before that date the next natural inflection point for whether the current modest short covering deepens or reverses.
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