Score one for SoundHound AISOUN $11.07 (22.72%), as the small-cap software company — and dreamboat of retail traders last year — soared Monday during an apparent short squeeze.
We say apparent, of course, because it’s impossible to conclusively say why any stock is moving at any particular moment.
But with no real news out for SoundHound Monday and the shares up roughly 20%, the massive amount of short interest in the stock (which we’ve spotlighted previously) clearly comes in for consideration as the catalyst.
As a refresher, short squeezes occur when short sellers — traders who borrow a stock, sell it, and hope to repurchase it at a lower price — are surprised when the shares actually rise. They then rush, en masse, to buy the stock, adding to upward momentum on prices and creating exaggerated price movements.
At last glance, stock out on loan to short sellers accounted for more than 30% of the company’s tradable float, a whopping indication the company, which for much of the last year dealt with lingering questions over its accounting practices, continues to face scrutiny from the market.
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