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SoundHound AI Faces Legal Storm

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Written by Timothy Sykes Reviewed by Bryce Tuohey Fact-checked by Matt Monaco
Updated 5/15/2025, 2:32 pm ET 6 min read
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SoundHound AI Inc.’s stocks have been trading down by -4.63 percent amid rising market uncertainty.

Trading Overview and Market Impact

  • Major law firms are targeting SoundHound AI, Inc., accusing it of misleading investors and flawed internal controls in financial reports regarding acquisitions.

  • A securities class action lawsuit has been filed, citing false or misleading company statements and inadequate disclosure of material weaknesses, notably in financial accounting and acquisitions.

  • SoundHound AI’s stock price has tumbled after revelations of these internal control lapses, prompting several legal investigations.

  • Investors must act by May 27, 2025, to assume the role of the lead plaintiff in ongoing class action lawsuits.

  • The company has been accused of inflating financial metrics through faulty reporting of goodwill post-acquisitions.

Candlestick Chart

Live Update At 14:31:55 EST: On Thursday, May 15, 2025 SoundHound AI Inc. stock [NASDAQ: SOUN] is trending down by -4.63%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Financial Report Highlights

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SoundHound AI recorded a turbulent fiscal year for 2024, plagued by substantial financial losses. Revenue dropped dramatically, painting a bleak picture. The gross margin lingered around 48.9%, while the bottom line revealed shocking numbers, with net income plunging to -$258.6M. The sheer magnitude of a negative EBIT margin, standing at -425%, points to inefficient operations and high costs. Unsurprisingly, the company did not release dividends to shareholders, reflecting financial restraints.

Financial strength remained tenuous as well, with a current ratio of 3.8 indicating decent short-term solvency but possibly excessive liquidity management considering operating challenges. A current ratio this high often signals an inefficient deployment of assets for firms in distress.

The valuation measures revealed an alarming price-to-sales ratio of 55.78, suggesting extreme overvaluation in stock price, distance from profitability, and a precarious momentum at best. A burning cash flow with a high enterprise valuation of $4.48B underscore investor concerns about exorbitant growth expectations that consistently fall short.

More Breaking News

Ultimately, the figures tell a tale of uncertainty, compounded by financial struggles and ensuing legal battles over pessimistic misguidance for investors. SoundHound faces overwhelming challenges ahead.

Stock Performance Insights

Examining stock performance, the recent prices reflect heightened volatility. On May 15, 2025, the closing price fell to $11.22, a reflection of turmoil across financial quarters. Intraday trading depicted a daunting oscillation between $11.62 and $10.9, adding to investor nerves.

SoundHound AI navigated through volatile trading periods with noticeable declines in stock value, echoing the confidence crisis created by lawsuits. Stock prices varied widely from the morning bell through to closing, signaling a market jittery over unpredictable shifts in company financials.

The daily churn of buying and selling brought a fluctuating average of $11.22 for notable daily sessions, signaling ambivalence and caution. Investors are left puzzled by unexpected variability, seeking answers amid perplexing legal accusations.

Legal Battles and Market Reactions

Lawsuits have cast an ominous shadow over SoundHound, posing serious threats to reputation and financial viability. Shareholders, reeling from unanticipated revelations of fragile internal controls, have pressured the company to amend corporate practices.

As per lawsuits filed, the absence of transparent disclosures surrounding acquisition accounting has elevated skepticism, reshaping the perception of operational due diligence. False claims alarm corporate watchdogs who now scrutinize discrepancies in reported goodwill while investigating securities fraud on a large scale.

The allegations struck hard, shaking investor sentiment. The potential repercussions point to detrimental audit practices that may have concealed actual organizational health until irrevocable red flags surfaced.

Given severe claims made against SoundHound, market attractiveness diminishes. As clouds gather over potential resolution, the strategic implications linger for possible business pivots or restructures.

Paths Forward: Evaluation and Conclusion

The road to recovery for SoundHound AI is convoluted with demanding accountability for financial oversight. The company’s strategic direction must confront extensive corrective accounting, integrate rigorous control enhancements, and address credibility deficit.

As these challenges unfold, the company’s future hinges on tackling extraordinary hurdles through tangible reforms that rebuild trader trust. As millionaire penny stock trader and teacher Tim Sykes says, “It’s not about how much money you make; it’s about how much money you keep.” This insight underscores the importance of prudent financial management amidst turmoil. The pathway isn’t straightforward, as the competitive terrain could exploit perceived weaknesses or capital missteps.

In conclusion, SoundHound’s trajectory remains precarious due to legal entanglements and declining stock performance. Traders face complex decisions amidst dwindling confidence, with ripple effects influencing broader market perceptions and potential operational adjustments at SoundHound.

This is stock news, not investment advice. Timothy Sykes News delivers real-time stock market news focused on key catalysts driving short-term price movements. Our content is tailored for active traders and investors seeking to capitalize on rapid price fluctuations, particularly in volatile sectors like penny stocks. Readers come to us for detailed coverage on earnings reports, mergers, FDA approvals, new contracts, and unusual trading volumes that can trigger significant short-term price action. Some users utilize our news to explain sudden stock movements, while others rely on it for diligent research into potential investment opportunities.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity.
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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”

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