SoundHound AI arrives at its May 7 earnings print carrying one of the most extreme short-side setups in the market — 38% of the free float sold short, a borrow market that has effectively run dry, and a cost to borrow that has tripled in a month.
The lending picture is the standout. Availability has dropped to zero — every share in the lending pool is currently lent out, the tightest reading in the past year. That scarcity has driven cost to borrow from roughly 10% in early April to 35% now, after briefly spiking above 60% intraday on April 28. Short interest has edged higher over the same period, rising about 7% across the month to 148 million shares, or 38% of the float — a level that ranks in the first percentile of the ORTEX universe. Short sellers cannot add meaningfully without paying sharply for the privilege, and covering into a rally would be expensive. The ORTEX short score has climbed steadily from 79 to 84 over the past two weeks, reflecting the growing pressure in the lending market. Despite that backdrop, options traders are leaning bullish: the put/call ratio has eased to 0.42, about one standard deviation below its 20-day average of 0.45, and close to its 52-week low of 0.31. Call demand is dominating the options market even as shorts are at historic concentration.
The bull-bear debate centres on whether SoundHound can translate its voice AI platform and the LivePerson acquisition into durable revenue growth. Bulls point to the company's debt-free balance sheet and expanding addressable market in voice commerce. Bears flag the revenue mix — non-recurring deals and customer concentration remain structural risks — alongside a fiercely competitive AI landscape. The analyst picture is split: DA Davidson held its Buy rating and $14 target as recently as April 22, while Piper Sandler remains Neutral with a $9 target trimmed after the February print. HC Wainwright carried a $20 target following a cut from $26 in early March. The mean target of $14.63 implies roughly 55% upside from the current $9.47 close — but valuation gives little traction here, with earnings and book value both negative and EV/EBITDA deeply in the red.
The stock has rallied 40% over the past month and 16% in the past week alone, even as short interest kept climbing — an unusual divergence that points to a short base unable to close positions rather than a conviction shift. The February print produced a muted 1-day reaction of less than 1%, though the stock drifted roughly 3% lower over the following five sessions. A cluster of insider sells in March — including the CEO, CFO, COO, CTO and co-founders all selling on the same day at $6.79 — adds to the complexity of the setup, though those trades were made at levels well below the current price.
Thursday's report tests whether SoundHound's revenue trajectory justifies the stock's sharp re-rating, or whether a disappointing print unlocks the release valve on the most tightly squeezed borrow market in the AI software space.
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