SoundHound AI (NASDAQ: SOUN) was like a yo-yo on Thursday morning. Shares of the artificial intelligence (AI) systems developer soared as much as 18.5% higher. By 11:05 a.m. ET, though, the stock was down 5.7%.
What’s behind SoundHound AI’s big swings today? It’s not clear.
The company didn’t make any announcements that would explain the initial gain or the subsequent sell-off. SoundHound AI submitted regulatory filings to the U.S. Securities and Exchange Commission (SEC) on Wednesday, revealing some recent stock sales by Morgan Stanley. However, those sales doesn’t seem to be large enough to move the needle very much.
Perhaps some short-sellers could have been covering their positions early on Thursday — making moves that drove the stock higher. Maybe once they completed their buying, the stock quickly fell. However, this is just a theory and can’t be proven.
What should investors make of SoundHound AI’s volatility?
Should anyone be surprised by SoundHound AI’s volatility? Nope. For a high-flying AI stock with a short percentage of float of over 15%, volatility comes with the territory.
SoundHound AI could (and probably will) continue to have big price swings in the future. Sometimes there will be straightforward reasons behind them, but sometimes not.
Is SoundHound AI stock a smart pick?
If you’re a conservative, risk-averse investor, you’ll be better off avoiding this stock. If you’re an aggressive investor, I think the decision about whether to buy SoundHound AI depends on your mindset. Over the short term, the stock will almost certainly remain highly volatile and could give up much of its gains. Over the long term, though, SoundHound AI could be a big winner.
Should you invest $1,000 in SoundHound AI right now?
Before you buy stock in SoundHound AI, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoundHound AI wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of March 11, 2024
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Did SoundHound AI Stock Soar, Then Sink Today? was originally published by The Motley Fool
Signup bonus from
