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SoundHound’s Potential Scandal: What Investors Need to Know

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Written by Timothy Sykes Reviewed by Bryce Tuohey Fact-checked by Matt Monaco
Updated 9/25/2025, 5:03 pm ET 9/25/2025, 5:03 pm ET | 5 min 5 min read
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On Monday, SoundHound AI Inc.’s stocks have been trading down by -7.99 percent amid market uncertainties and changing AI demands.

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Live Update At 17:03:12 EST: On Thursday, September 25, 2025 SoundHound AI Inc. stock [NASDAQ: SOUN] is trending down by -7.99%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Overview of SoundHound’s Financial Health

As trader strategies evolve with the ever-changing financial landscape, flexibility becomes a key component of success. Adapting to new trends and shifting market dynamics can be daunting but is essential for survival and growth in trading. As millionaire penny stock trader and teacher, Tim Sykes, says, “You must adapt to the market; the market will not adapt to you.” The ability to pivot and adjust one’s strategies quickly in response to market conditions distinguishes successful traders from those who struggle. Those who embrace change and innovation are better positioned to capitalize on emerging opportunities and mitigate risks.

SoundHound AI Inc., known for voice AI innovations, recently published its quarterly financial data. The company has faced difficulties in achieving positive margins, evident from a staggering gross margin of just 40.5. SoundHound’s recent revenue of nearly 84.7M can’t conceal its financial woes, reflected in massive pretax losses exceeding 73M and operating cash flow challenges standing at -24.5M. These figures have the potential to rattle investor confidence, accentuated by its high price-to-sales ratio of 55.98, which indicates that the company’s market valuation is exceptionally higher relative to its sales revenue. It demands investors to tread cautiously given this scenario.

Financial strength metrics paint a mixed picture. The impressive current ratio of 4.8 highlights short-term liquidity strength, but others like total debt to equity at a meager 0.01 suggest an over-reliance on equity financing. Operational challenges are further intensified by a negative return on assets of -46.01.

Exploring the Impact of the News

The investigation news surfaced amidst SoundHound’s notable trading activity, with fluctuations witnessed continuously over days. From an impressive high of $17.29 on Sep 25, 2025, the stock closed at $16.35, highlighting an underlying market unease possibly connected to the investigation revelations. The news is a significant needle mover given the recent inquiries claiming potential financial misreporting and acquisitions accounting may affect shareholders’ confidence.

On the trading front, SoundHound displayed sizeable price gyrations, reflecting potential heightened sensitivity amongst investors to any adverse news. The company’s earnings report, despite boasting a gross profit of 16.66M, stresses the inconsistency of sustaining profits when weighed against its persistent high operating expenses and cash deficits.

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Conclusion on Market Implications

With the scrutiny faced from the current investigation, potential legal repercussions may emerge, creating a mix of market unrest and cautious trading stances. A company’s financial integrity is core to its valuation, and the ongoing evaluation against SoundHound could impact stock prices further, possibly inhibiting the company’s ability to leverage capital markets soon.

Traders keen on SOUN are advised to consider this precarious situation. Though the tech landscape remains favorable, transparency remains pivotal to maintaining trader trust. Thus, any potential missteps or credibility hits might prompt downward pressure on their stock, challenging even the most steadfast traders.

As millionaire penny stock trader and teacher Tim Sykes says, “Be patient, don’t force trades, and let the perfect setups come to you.” For now, the emerging situation requires diligent monitoring as resolution paths may reshape SOUN’s standing in the AI vertical in the foreseeable future.

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.

Dive deeper into the world of trading with Timothy Sykes, renowned for his expertise in penny stocks. Explore his top picks and discover the strategies that have propelled him to success with these articles:

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Tim Sykes

Head Writer at TimothySykes.com, Lead Mentor at the Trading Challenge
In his 20-plus years of trading, Tim has made $7.9 million. In his 15-plus years of teaching, Tim’s Trading Challenge has produced over 30 millionaire students. His philosophy emphasizes small gains and cutting losses quickly.
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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”