SoundHound AI (SOUN) Stock: Short Sellers Feel the Squeeze as Shares Rocket

TLDR:

SoundHound AI stock jumped 22.6% on Monday despite no major company news The rally appears primarily driven by a short squeeze forcing short sellers to cover positions SoundHound reported 151% year-over-year revenue growth in Q1, though slightly below expectations The company maintained its 2025 revenue outlook of $157-177 million Analysts have mixed views on SOUN, with an average price target of $11.42 (4% upside potential)

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SoundHound AI, a leading voice artificial intelligence company, saw its stock price surge by an impressive 22.6% on Monday, May 12, 2025. The dramatic price movement caught market attention as it occurred without any major announcements from the company.

SoundHound AI, Inc. (SOUN)

Market analysts attribute the sudden jump primarily to a short squeeze in SOUN stock. This happens when a heavily shorted stock rises in price, forcing short sellers to buy shares to cover their positions, which drives the price even higher.

The company’s CEO, Keyvan Mohajer, had previously addressed the rising short interest in March. He stated that short sellers wouldn’t change the company’s long-term mission.

The stock movement comes after a challenging start to 2025 for SoundHound. Despite impressive gains in 2024, SOUN has dropped more than 40% year-to-date, erasing much of last year’s progress.

This pullback reflected growing investor concerns about the company’s previously high valuation levels.

Financial Performance

SoundHound’s recent first-quarter results showed strong momentum in its voice AI segment. The company reported revenue growth of 151% year-over-year, though this figure came in slightly below analyst expectations.

Looking forward, SoundHound maintained its 2025 revenue guidance between $157 million and $177 million.

The company also reaffirmed its goal of reaching adjusted EBITDA profitability by the end of 2025. This target is supported by ongoing revenue growth and recent cost-cutting measures.

Analyst reactions to SoundHound’s results have been mixed. Some lowered their price targets, while others maintained Hold ratings, suggesting cautious optimism amid the stock’s volatility.

Market Position

SoundHound continues to capitalize on strong demand for its voice AI solutions, according to a recent Wedbush note. While the firm lowered its price target from $22 to $15, it maintained an “Outperform” rating on the shares.

The broader market optimism following a temporary reduction in U.S.-China tariffs may have also contributed to the stock’s surge. Though SoundHound primarily offers software and isn’t directly affected by tariffs, the AI industry relies heavily on hardware produced through U.S.-China trade.

Rising hardware costs due to tariffs can make operations more expensive across the AI sector, including for companies like SoundHound.

There’s also concern that if trade tensions worsen, SoundHound could potentially face restrictions in China, which would impact its partnerships with companies like Tencent.

According to TipRanks data, SOUN stock currently has a Moderate Buy consensus rating. This reflects three Buy ratings and three Hold ratings assigned in the last three months.

Source: TipRanks

The average price target for SoundHound stock stands at $11.42, suggesting a potential upside of about 4% from current levels.

SoundHound AI is positioned at number 10 on a recent list of AI stocks making moves this week. The company had 11 hedge fund holders as of Q4 2024.

The company’s most recent quarterly results showed a slight miss on revenue but a beat on the bottom line. The stock was trading at $10.98 at market close on Monday, reflecting the day’s substantial gains.

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