SoundHound AI shares have extended their decline, touching an intraday low of $5.38 on Friday — the weakest level since November 2024. The voice artificial intelligence company has now lost roughly 80% of its value from its all-time high, a retreat that has erased much of the enthusiasm that followed Nvidia's disclosed stake in the business.
The selloff has been accompanied by a sharp rise in bearish positioning. Short interest in SoundHound now stands above 40% of the float, placing it among the most heavily shorted companies listed in the United States. Short interest measures the volume of shares that traders have sold short but not yet repurchased, and a reading this elevated signals that a large contingent of market participants expects further declines.
Fundamentals versus price action
The bearish sentiment contrasts with the company's recent operating results. SoundHound's latest quarterly report showed revenue climbing 45% year over year to $61.9 million, supported by new enterprise agreements. The company signed a seven-figure contract with a healthcare system employing more than 30,000 people and renewed relationships with customers including Rakuten Securities and Hyundai.
Losses also narrowed. Net loss for the quarter came in at $42.8 million, an improvement from $74 million in the prior-year period. Management raised its full-year revenue guidance to a range of $230 million to $260 million. Analysts currently project revenue of about $251 million for the year, with roughly $390 million expected next year — figures that do not yet fully reflect the company's recent $43 million acquisition of LivePerson.
Technical breakdown
On the weekly chart, SoundHound has been in a sustained downtrend since late last year. The stock has now fallen below the $5.80 support level that had held in March and August, invalidating a double-bottom pattern that had been forming. A double bottom is a widely followed bullish reversal signal, and its failure removes a potential floor for the shares.
Price is also trading beneath the 50-week exponential moving average and below a descending trendline drawn from the January swing high. The double-bottom structure had been part of a larger descending triangle, a pattern that typically resolves in the direction of the prevailing trend. On that basis, the path of least resistance appears lower, with $4 emerging as the next level of interest for chart watchers.
The squeeze scenario
The counterargument rests on the same short interest figure that reflects bearish conviction. If the stock were to rally, short sellers could be forced to buy shares to close their positions, creating a feedback loop that accelerates gains. GameStop's 2021 episode and OpenDoor's move last year are frequently cited examples of such dynamics.
With earnings approaching, the potential for a squeeze may be heightened, since a positive surprise could pressure heavily positioned bears. That said, elevated short interest alone does not guarantee a rally, and the technical picture currently points to continued downside risk. Investors weighing the two scenarios face a stock where sentiment and fundamentals are pulling in opposite directions.
This article is for informational purposes only and does not constitute financial advice.
