Why SoundHound AI Stock Soared on Thursday

Core Viewpoint - SoundHound AI's stock experienced a significant increase of 22.1% in a single trading day, driven largely by social media influence rather than fundamental news or earnings reports [1][2]. Group 1: Stock Performance and Market Activity - SoundHound AI's shares started the day with a modest gain and closed with a 22.1% increase [1]. - The stock had no specific news or filings with the SEC on that day, and the upcoming earnings report is anticipated [2]. - The stock is trending on social media platforms, particularly Reddit, where influencers are promoting heavy buying ahead of the earnings report [4]. Group 2: Market Characteristics - The company has a market capitalization of $2.5 billion, indicating it is a relatively small stock [5]. - There is a significant short-selling interest in SoundHound AI, with 24% of the total shares sold short, which could lead to a short-squeeze [4][5]. - Trading volume for SoundHound AI reached 69 million shares, more than triple the average over the past month, reflecting heightened interest [5]. Group 3: Business Fundamentals - SoundHound AI is recognized for its strong long-term business prospects, particularly in the AI tools for audio interpretation and voice controls sector [6][7]. - The company has a growing client list that includes major car manufacturers, restaurants, and consumer electronics companies [7]. - The backlog of unfilled orders and subscription contracts was reported at $723 million, expected to increase in the upcoming earnings report [7]. Group 4: Investment Sentiment - While there is agreement that SoundHound AI is a good investment, the current market conditions are not seen as the right time to buy the stock due to potential price volatility [8][9]. - The focus is on the upcoming Q3 report, particularly regarding the growth of the order backlog, rather than immediate stock purchases [9].