SoundHound AI heads into the final stretch of summer with shorts back on the offensive, a fully exhausted lending pool, and options traders the most bullish they've been in a year.
The most notable shift this week is the reversal in short positioning. After bears spent much of July and early August trimming roughly eight million shares from the position, that covering wave has now not only stopped — it has turned. Short interest nudged up 1.6% on the week to 41.85% of the free float, the first meaningful rebuilding since the drawdown began. That matters because the structural constraint that made the prior note's headline hasn't changed at all: availability is pinned at 0%. Every share in the lending pool is lent out. That means any fresh shorts rebuilding this week had to source borrows through the secondary market, likely at premium terms, even as the headline cost to borrow continues to slide. CTB is now at 5.0%, down from 5.3% last week and more than 60% below its mid-July peak of nearly 16%. The divergence — shorts rebuilding while the borrow pool stays empty and headline CTB falls — suggests the existing book is rolling cheaper on legacy contracts, while incremental capacity is effectively zero. A fully locked borrow market with bears adding is the tightest setup this stock has been in all year.
Options positioning runs in the opposite direction, and the contrast is worth naming explicitly. Bullish positioning in the options market has reached its most extreme reading since last year. The put/call ratio dropped to 0.354 at week's close, more than 1.35 standard deviations below its 20-day mean of 0.40 — and within touching distance of the 52-week low of 0.3149. For a stock with 42% of its float short and zero borrowing availability, call buyers are outnumbering put buyers at an unusually wide margin. The ORTEX short score, at 76.6, has been essentially flat over the past ten sessions, suggesting no near-term structural shift in the underlying lending dynamics is being priced. Taken together, the positioning picture is one of two separate conviction sets pulling hard in opposite directions: shorts locked in and rebuilding, options buyers piling into calls at the same time.
The Street is firmly on the constructive side, though the conviction has faded. Analyst action in early August — the most recent activity inside the six-month window — was uniformly in one direction: target cuts. DA Davidson trimmed its buy-rated target from $12 to $10, while Piper Sandler moved its neutral target from $8 to $7, both actions filed the morning after the August earnings print. The consensus target sits at $12.71, implying roughly 89% upside to the $6.74 close — a gap that reflects more about the stock's underperformance than fresh conviction. The factor score picture is similarly split: EPS momentum scores rank in the 87th–93rd percentile, and EPS surprise is strong at the 87th percentile. But the short score and days-to-cover ranks sit in the 2nd and 11th percentiles respectively, reflecting how extreme the structural short position remains against the fundamental improvement story.
The earnings track record adds another layer to watch. The August 6 print — the most recent — produced a one-day move of almost 25%, with the five-day follow-through adding another 16%. The prior print on August 5 moved 8.8% on day one and 13.7% over the week. With the next event scheduled for November 5, the question structurally is whether the locked borrow market creates a pressure point before that date, or whether the competing forces of short rebuilding and call-buyer optimism simply grind through the intervening weeks without resolution. BlackRock's latest 13G/A places its stake at 8.3% of the class — the largest institutional holder on record — while the Vanguard complex holds a further 10%-plus through two vehicles; both have been adding recently. That provides a stable core, but the 173 institutional holders collectively represent a thin cushion against the bears who cannot easily be displaced while the borrow pool stays at zero.
The immediate variable to watch is whether availability cracks above zero and whether new shares entering the pool are absorbed by shorts covering or by fresh shorts being added — that answer will determine whether the current rebuilding phase has further to run.
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