SoundHound faces a pack of circling short sellers

Erstwhile retail fave SoundHound AI dropped again on Tuesday, adding to a year-to-date decline of more than 50% for the voice AI company.

SoundHound stock market woes grew in mid-February when Nvidia disclosed that it had sold its stake in the company. (Nvidia’s involvement was, essentially, the source of most of the excitement in SoundHound last year, when the stock ran up roughly 1,000%.)

The announcement pummeled the shares, as did an ugly earnings report that showed deepening losses, which was followed by news that it would delay filing its annual report in light of ongoing “material weaknesses” it had discovered in its financial controls. (It filed the 10-K last week.)

Such announcements can act like blood in the water to short sellers, who seem to have picked up the scent on SoundHound. Short interest, the number of shares that are borrowed and sold short in the hopes of profiting on a decline in the share price, has hit a record-high 119 million shares, or roughly 34% of the tradable float, suggesting that the pressure on the stock — and the company — is growing.

Go deeper: Read our Q&A with SoundHound AI CEO Keyvan Mohajer