SoundHound AI soars after posting a couple of sick beats
Adjusted losses were less than expected. Sales also beat Wall Street’s bogey.
Midcap retail plaything SoundHound AI is howling — in a good way — after posting Q2 sales that were much better than expected, though profits were merely less bad than expected. The company also bumped its full-year revenue guidance a bit higher.
For objective observers, that might not seem like reason to dance in the street. But the shares have gone nuts, rising 22% in recent trading.
Often bullish tech analyst Dan Ives wrote of the numbers:
“Overall, we believe this was a major step in the right direction for the SOUN story, with strong demand heading into FY25 across all verticals as the company remains an under-appreciated pure-play AI company that is making significant strides in taking share across all verticals.”
My esteemed colleague Luke Kawa has sensibly pointed out that we should be a bit cautious about attributing a big move in a stock on any given day to short sellers getting squeezed. He thinks that often such “short squeezes” can more accurately be characterized as “buying binges.”
And he’s quite right that most data cited on short interest lags quite a bit, meaning it’s impossible to know for sure that shorts had been caught, well, short.
Still, the outsized reaction to SoundHound’s results does feel a bit “squeezey” to me. There’s been a pretty massive short in the shares for a while, with the most recent data from the exchanges on short interest, which lags by a couple weeks, showing that roughly 35% of the company’s public float was in the hands of short sellers. But again, it’s impossible to say for sure.
