SOUN SoundHound AI Stock Analysis, AI Lie?!

Extrinsic Trades
25 Mar 202405:10

TLDRThe video discusses Sound Hound's stock performance, noting a 42% drop in value and predicting a further decline to $5. It highlights a previous insider dump, high short interest, and analyst upgrades during volatile trading as suspicious activities. The speaker observes the stock's downward trend, resistance at the $6 level, and its position below key moving averages. The video advises caution on trading options due to high implied volatility and suggests that the stock could drop lower, with many retail investors seemingly optimistic about short-term call options.

Takeaways

  • 📉 Sound Hound's stock price has dropped 42% and is currently at $5.87.
  • 🎯 The speaker has a $5 target price for Sound Hound, expecting it to reach this level in the coming days.
  • 🗓️ Initial coverage of Sound Hound began around February 29th, following an insider dump.
  • 🚀 After the insider dump, the stock price quickly moved from $18 to $56, then experienced a significant drop.
  • 💸 The speaker posted analysis on Patreon about the potential breakout, specifically mentioning the in-the-money contracts.
  • 🤨 The speaker expressed skepticism about an analyst upgrade that occurred during a highly volatile market period.
  • 📉 High short interest and borrowing rates indicate a strong demand to short the stock, suggesting a bearish sentiment.
  • 🔍 The speaker is monitoring the support level at $5.67, with the next level being $5.48 if it breaks below this point.
  • 📈 Despite a general downtrend, the stock is currently above its volume weighted average price.
  • 📊 The stock is trading below both the 50-day and 200-day moving averages, indicating a downtrend.
  • ⏱️ The speaker advises against trading options on Sound Hound due to high implied volatility and the potential for significant price swings.

Q & A

  • What happened to Sound Hound's stock price recently?

    -Sound Hound's stock price has dropped by 42% and was trading at $5.87 at the time of the transcript.

  • When did the speaker start covering Sound Hound?

    -The speaker started covering Sound Hound around February 29th.

  • What event initially caught the speaker's attention regarding Sound Hound?

    -The speaker noticed an insider dump and a price push from $18 to $56, which led to their coverage of the stock.

  • What was the speaker's prediction about Sound Hound's stock price?

    -The speaker predicted that Sound Hound's stock price would go down to $5.

  • How did the market react to the analyst upgrade of Sound Hound's stock?

    -The market was volatile, and the stock was barely holding on, which made the speaker suspicious of the timing of the analyst upgrade.

  • What is the current short interest for Sound Hound?

    -The short interest for Sound Hound is very high, indicating that many people are looking to short the stock.

  • What support level is the speaker watching for Sound Hound?

    -The speaker is watching the support level of $5.67 for Sound Hound.

  • What is the current trend for Sound Hound's stock according to the speaker?

    -The stock is in a downtrend, trading below both the 50-day and 200-day moving averages.

  • What is the speaker's opinion on trading options for Sound Hound?

    -The speaker advises against trading options for Sound Hound due to the high implied volatility and the downtrend of the stock.

  • What does the speaker note about the volume weighted average price for Sound Hound?

    -The stock is still above its volume weighted average price, which could be an indicator for some traders.

  • What is the speaker's overall view on Sound Hound's stock movement?

    -The speaker believes that the stock can go much lower and is not optimistic about short-dated calls being bought by retail investors.

Outlines

00:00

📉 Sound Hound Stock Analysis and Market Prediction

The paragraph discusses the current state of Sound Hound's stock, which has seen a significant drop of 42%. The speaker provides a background of their analysis, starting from February 29th, and discusses the stock's performance following an insider dump. The speaker also mentions a suspicious analyst upgrade during a volatile market period. The focus then shifts to the stock's technical analysis, highlighting the high short interest and the stock's downward trend, with support levels at $5.67 and $5.488. The speaker advises against trading options due to the stock's high implied volatility and potential downside. The paragraph concludes with a note that the content is for entertainment and educational purposes.

05:02

🚫 Disclaimer on Stock Discussion

This paragraph serves as a disclaimer, emphasizing that the content of the video, including the stock analysis and predictions, is for entertainment and educational purposes only. The speaker reminds viewers to make their own decisions and not to take the analysis as financial advice.

Mindmap

Keywords

💡Sound Hound

Sound Hound is the central subject of the video, referring to a company whose stock performance is being analyzed. The video discusses the company's stock price drop, market trends, and investor sentiment.

💡stock price

The stock price is the cost at which a share of a company's stock is bought or sold. In the context of the video, it is crucial as it reflects the performance of Sound Hound and is the basis for the analysis and predictions made.

💡target price

A target price is the projected price at which an investor expects a stock will trade at a future date. In the video, the target price of $5 for Sound Hound is mentioned as a goal the stock is expected to reach.

💡insider trading

Insider trading refers to the buying or selling of a company's stock by individuals with access to confidential, non-public information about the company. The video discusses an instance of insider selling, which is seen as a negative sign for the stock.

💡short interest

Short interest is the total number of shares that have been sold short but not yet covered or closed out. High short interest can indicate that many investors believe a stock's price will decline. In the video, it is used to analyze investor sentiment towards Sound Hound.

💡borrowing rate

The borrowing rate in the context of stock trading refers to the cost that short sellers pay to borrow shares to cover their short positions. A higher borrowing rate suggests increased demand to short a stock. The video uses this to explain the increased interest in shorting Sound Hound.

💡support level

In technical analysis, a support level is a price level where a stock is expected to find buying interest and potentially stop a decline. The video mentions a specific support level for Sound Hound that investors are monitoring.

💡downtrend

A downtrend is a period in a financial market during which prices are consistently falling. The video describes Sound Hound's stock as being in a downtrend, indicating a bearish market sentiment.

💡volume weighted average price (VWAP)

Volume Weighted Average Price (VWAP) is a measure used in technical analysis that averages the price of a stock or market over a period of time, weighted by the volume of trades. It is used to analyze the strength of a stock's price movement. In the video, VWAP is mentioned as a reference point for the stock's current trading level.

💡options trading

Options trading involves buying and selling contracts that give the holder the right, but not the obligation, to buy or sell a stock at a set price within a certain time frame. The video discusses the implications of options trading for Sound Hound, particularly in the context of its high implied volatility.

💡implied volatility

Implied volatility is a measure of the expected volatility of a stock's price and is used in options pricing. High implied volatility suggests that the market expects large price swings in the future. The video mentions that Sound Hound has high implied volatility, which affects the cost of options trading.

Highlights

Sound Hound's stock has dropped 42% and is currently at $5.87.

The speaker is watching for the stock to reach their $5 target.

The speaker began covering Sound Hound around February 29th, during an insider dump.

There was a significant price movement from $18 to $56, followed by a rapid decline.

The speaker posted a video on Patreon explaining the stock's breakout and the in-the-money contracts.

After the video was posted, the stock was expected to return to $5, which was met with disapproval by some.

An analyst upgraded the stock during a volatile market hour, which raised suspicions.

Short interest for Sound Hound is high, indicating many people are betting against the stock.

The borrowing rate for shorting the stock has increased significantly.

The support level to watch is $5.67, as the stock has been gradually declining.

The stock opened above $6 but slipped below, with $6 acting as resistance.

The stock is trading below its 50-day and 200-day moving averages, indicating a downtrend.

Volume for the stock is dropping, which is not favorable for a rebound.

Other AI stocks are muted, except for NVIDIA, which is trying to push higher.

Implied volatility is still high for Sound Hound, making options trading risky.

The speaker advises against trading options on Sound Hound due to the stock's downtrend and high implied volatility.

There are many short-dated call options being bought, with a significant number out of the money.

Only 3% of the 60,000 contracts traded were in the money, indicating retail traders' optimism.

The speaker's opinion is that the stock can go much lower, and the videos are for entertainment and educational purposes only.

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