SoundHound AI heads into the week with a familiar split — the stock just posted its best weekly gain in over a month, yet the short position barely budged and the borrow market remains completely frozen.
The price move is the new development. SOUN closed at $6.96 on July 6, up 8.75% on the week and 6.3% on the day alone. That rally happened against a short book that has not meaningfully retreated. Short interest eased only fractionally — down 0.3% day-on-day to 41.9% of the free float, essentially flat with the 42.1% recorded at the June 30 close that was reported in the prior note. The ORTEX short score held at 80.9, unchanged in character from the 81.2 peak of last week. This is a heavily congested short trade that is not covering into the rally. At 5.9 days to cover from the latest FINRA fortnightly reading, any forced unwind remains a multi-session process.
The borrow market is where the constraint is clearest. Availability has been 0% every single session in the data window — every share in the lending pool is committed, a condition that has persisted without a single break throughout June and into July. Cost to borrow eased 26% on the week to 11.7%, down from a mid-week peak around 14% and the lowest level in this current run. That softening in borrow cost is the one signal that distinguishes this week from last: the rate paid to maintain short positions is coming down even as the positions themselves remain near peak size, suggesting borrowers are rolling at slightly better terms rather than closing. Availability tightening has been at its 52-week maximum for weeks, so there is no incremental squeeze available from the lending pool itself.
Options traders remain firmly in the bull camp, and are getting more so. The put/call ratio fell to 0.35 — the lowest reading in the past year and more than a standard deviation below its 20-day average of 0.40. The contrast with recent history is sharp: back in mid-June the PCR was running near 0.45-0.47. That drift lower tracks almost perfectly with the price rally, meaning each leg higher has been accompanied by increasing call demand relative to puts rather than defensive repositioning. With the PCR close to its 52-week floor of 0.31, options positioning is about as bullish-skewed as it gets for this name.
The Street picture is thinner than the positioning story warrants. The consensus sits at hold, with the most recent analyst action — Northland Capital lowering its target to $12 from $14 in early May — pointing to caution on execution even among the bulls. The three firms with active coverage are split: two Buy-rated analysts (DA Davidson and HC Wainwright) maintain targets of $14 and $20 respectively, while Piper Sandler's Neutral with a $9 target sits below the current price of $6.96. On forward EPS momentum, SOUN ranks in the 99th percentile over 90 days — analysts have been lifting estimates aggressively. The bear case remains live, though: the stock still trades at elevated revenue multiples for a company with a negative EPS, and the company's CEO and several co-founders ran scheduled sells in mid-June at $7.46.
On the insider side, that June 15 cluster is worth noting not for its significance score — ORTEX rates each trade at 1 out of 10 — but for its breadth. CEO Keyvan Mohajer sold roughly 127,000 shares, COO Michael Zagorsek sold 65,000, CSO Seyed Emami and co-founder James Hom each sold 29,000, and CTO Timothy Stonehocker sold 19,000. All on the same day, all at $7.46. The pattern has the look of coordinated plan-based selling, which is routine, but the timing — at a price above where the stock trades today — will be noted by bears who read it as insiders lightening up near recent highs. Net insider flows over 90 days remain modest in dollar terms.
Earnings arrive August 6. The last two quarterly prints both produced negative day-one reactions — down 2.3% and down 5.2% respectively — though the May report recovered to a 5-session gain of 8.2%. With the borrow market still frozen and short interest near record levels for this name, the August print is the next natural catalyst for either a covering rally or a fresh leg down, depending on whether SoundHound can show the revenue execution the bulls are pricing in.
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