SoundHound AI enters the week with a subtle but meaningful shift — short covering has effectively stopped, and the borrow market that sealed three weeks ago has not reopened.
Short interest ticked fractionally higher this week, ending at 41.8% of the free float as of August 19. That is a reversal of the post-earnings de-risking trend that the prior two notes documented. The retreat from the late-July peak of roughly 43.8% now appears to have run its course, at least temporarily. Short interest is essentially flat on the week — up just 0.66% — and up slightly on the day. The monthly picture still shows a modest 1.2% decline in shares short, but the directional momentum that defined August's first two weeks has stalled. Shorts who covered did so through open-market purchases; the structural mechanism behind this remains unchanged. Availability is pinned at 0% across every session in the full 30-day history — not a single share has returned to the lending pool. Every dollar of covering happened in the secondary market. The borrow seal has not cracked.
Cost to borrow tells a softer story, but the direction matters more than the level. At 8.6%, it has fallen 21% on the week and more than 42% over the past month — down from above 15% in late July. That declining carry cost removes one pressure valve that was nudging marginal shorts to close out. With borrowing cheaper and no new shares available, the structural standoff in the lending market looks set to persist. The ORTEX short score of 78.6 — still near the top of the universe despite easing slightly from 81.0 a fortnight ago — reflects that combination: heavy positioning, exhausted borrow, and a score rank in the bottom 1% of all stocks.
The Street picture is mixed but leaning cautious. Following the August 5 earnings print, two analysts trimmed targets. DA Davidson maintained its Buy but cut the target to $10 from $12. Piper Sandler held its Neutral and brought its target down to $7 — essentially flat to where the stock trades today at $7.16. The mean price target across the coverage base sits at $12.71, implying meaningful upside on paper, but the dispersion between a $7 floor (Piper) and higher bull targets suggests real disagreement on the path forward. The bear case centres on the LivePerson acquisition debt load — roughly $392 million — and negative GAAP operating income. The bull case rests on cross-selling synergies from that deal and a genuine expansion of conversational AI deployments. EPS momentum scores rank in the 94th percentile on the 30-day view and the 85th percentile over 90 days, suggesting analysts are actively revising estimates upward even as profitability remains deeply negative.
Options positioning has shifted more defensive over the past two weeks. The put/call ratio has climbed to 0.44, roughly 1.5 standard deviations above its 20-day average of 0.39. That is a notable move from sub-0.37 readings in late July, though it remains well below the 52-week high of 0.67. The pattern tracks the broader reassessment underway: two earnings beats drove call enthusiasm through early August, and the PCR troughed around that period. Since then, as covering slowed and the LivePerson integration risks came back into focus, put demand has quietly rebuilt. Peer performance this week adds context — CRNC fell 6% and OPRA dropped 9%, while PLTR added 2.4%, illustrating how fractured small-cap AI sentiment remains.
The institutional register shows insiders net selling across the leadership team — CEO Keyvan Mohajer, co-founders, the COO, and the CFO all sold in the June window, totalling roughly $2.3 million at prices near current levels. These appear to be scheduled disposals rather than conviction calls, but the absence of any insider buying while the stock trades below $10 is a data point worth holding alongside the bear case.
The next earnings event is not until November 5. Between now and then, the angle to watch is whether the covering pace resumes as cost to borrow continues its drift lower — or whether the stall in short interest, combined with an unbroken availability floor of 0%, indicates that the short book has found a new equilibrium at around 42% of the float.
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