SoundHound (NASDAQ:SOUN) extended its slide this week, falling to its lowest level since November 2024. The stock has now declined for nine straight weeks and sits nearly 80% below its all-time high.
Nvidia-Backed SoundHound is Highly Shorted
SoundHound AI, a company that Nvidia invested in, has come under intense pressure in the past two years. Its stock has plunged, with its market capitalization falling from over $8.79 billion in December 2024 to $2.42 billion today.
The plunge has coincided with a surge in short interest. Benzinga data shows that 40% of the float is now sold short, making SoundHound one of the most heavily shorted stocks in the United States. Such a high level suggests that many investors expect the shares to keep falling.
The stock’s retreat has also continued after it acquired LivePerson in a $43 million deal. Its goal is to merge its voice and agentic AI with digital messaging into the OASYS platform. There are concerns about its integration risk since it is already losing millions of dollars.
SoundHound shares have also fallen as investors question whether its revenue growth can last. Second-quarter revenue jumped 45% from a year earlier, which is fast, but it was slower than the pace of previous quarters.
On the positive side, SoundHound has already gone through a valuation reset. It is also maintained its growth trajectory, with management expecting its annual revenue expected to jump to between $230 million and $260 million. The real figure will be higher as it starts to incorporate its LivePerson.
Another positive is that analysts expect its stock to rebound. DA Davidson has a target of $10, much higher than the current $5.30. Similarly, HC Wainwright has a target of $20, while Cantor Fitzgerald has $15.
SoundHound Stock Dropped Below Key Support
On the charts, SOUN stock has been in a strong sell-off and has moved below the important support level of $5.80. This support level was along the lower side of the descending triangle pattern, a common continuation sign.
The stock has slumped below all moving averages, while the Relative Strength Index (RSI) has just moved to the oversold level of 30 for the first time since March 2026.
Therefore, the stock may drop further in the near term as the panic selling accelerates. However, the risk is that its high short interest means that it may experience a short squeeze.
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