SoundHound AI is three weeks into a short-covering trend, but the borrow market is offering no relief — and the cost to exit is finally starting to fall.
The short-cover story has continued since the May 29 note flagged the initial acceleration. Short interest has dropped further to 37.4% of the free float as of June 2, down from 37.9% a week ago and well off the mid-May peak near 39.4%. That is a genuine, sustained directional move — not noise. Over the past month, the short base has shrunk by roughly 2%, and the pace has held steady across the last three weeks without reversal. At 145 million shares short, the position is still enormous in absolute terms, and days to cover from the latest FINRA filing sits at 4.1 days. But the direction is clear: the short book is being unwound, slowly and under duress.
The borrow market remains the defining constraint. Availability is at exactly 0% — every share in the lending pool is still lent out, a condition that has now persisted almost continuously since late April. That is the tightest reading the market has produced all year, and there is no sign of new supply entering. What has changed is the cost. Borrowing SOUN has become meaningfully cheaper — cost to borrow has fallen to 13.9% from 20.3% a week ago, and from a peak near 61% in late April. That is still a real carry burden for a stock priced at $8.82, but it is no longer the acute emergency it was six weeks ago. The ORTEX short score has eased to 81.0 from 85.1 ten days ago — still deeply elevated, ranking in the bottom 1% of all stocks by this measure, but the trend is pointing lower.
Options traders are positioned for further upside, not for a reversal. The put/call ratio has dropped to 0.42, two standard deviations below its 20-day average of 0.46 — the most call-dominated reading in weeks. That sits near the lower end of the 52-week range (0.31–0.67). Calls dominate the options book by a wide margin. That is a notable read: even with a stock that has pulled back 4.6% on the day to $8.82 after an 8.5% weekly gain, options positioning has not turned defensive. The week's move took the stock close to the $9.00 high touched on May 29 before Tuesday's decline. Peers were mixed on the day — AUR gained 3.3% while REKR fell 4.8% — so the daily drop appears stock-specific rather than sector-driven.
The Street offers a divided view. The consensus is a Hold, with the mean price target at $14.25 — well above the current price — though most of the analyst activity is several months old and should be treated with some caution. DA Davidson maintained its Buy at $14 in late April. The most recent substantive target cut came from HC Wainwright in early March, which trimmed from $26 to $20 while keeping its Buy. Piper Sandler's Neutral at $9 is the closest to current levels. The bull case centres on a debt-free balance sheet, diversified revenue streams, and margin expansion from acquisitions. Bears point to a forward revenue multiple running roughly 30x 2026 estimates — a level that leaves almost no margin for error in a competitive Voice AI market. EPS momentum scores are extraordinary — ranking in the 99th and 100th percentile on both the 30-day and 90-day measures — suggesting analysts have been aggressively revising estimates higher, even as the quality of the underlying business remains weak.
The next catalyst on the calendar is the Q2 earnings call on August 6. The two most recent prints both produced negative first-day reactions — down 5.2% after the May 7 report and down 2.3% after the May 22 call — though the five-day window after May 22 recovered to a gain of 8.2%. The pattern worth watching heading into August is whether the covering trend accelerates as the quarter progresses, or whether it stalls with availability still pinned at zero and no obvious path for shorts to rebuild positions at lower cost.
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