SoundHound AI Stock Sinks On Plan To Raise $500M Through Securities Offerings: Retail Stays Bearish

SoundHound AI, Inc. (SOUN) shares retreated in Tuesday’s premarket after the voice and conversational artificial intelligence (AI) solutions provider proposed raising capital through share sales.

SoundHound AI’s registration statement filed with the SEC on Tuesday comprises a base prospectus for implementing a shelf registration process and sales agreement prospect for implementing a $250 million ‘at-the-market” program under the shelf registration statement.

The base prospectus covers the issuance of up to $500 million of the company’s Class A shares, including the $250 million at-the-market program, preferred stock, purchase contracts, warrants, subscription rights, depository shares, debt securities, and/or units.

SoundHound AI intends to use the net proceeds from the “at-the-market” equity offering for general corporate purposes and working capital, including investing in or acquiring synergistic or complementary businesses, assets, or technologies. 

The Santa Clara, California-based company’s stock was on a roll late last year, especially after the presidential election. The company was also brisk with its product and partnership announcements, and as recently as last week, it announced a collaboration with roadways intelligence systems company Rekor Systems, Inc. ($REKR).

SOUN sentiment and message volume January 28, premarket as of 8 am ET | Source: Stocktwits

On Stocktwits, sentiment toward the stock sunk further into ‘bearish’ territory (31/100) but message volume rose to ‘high’ levels. 

Some stock watchers on the platform panned the capital raise as a ‘’penny stock strategy.”

Another suggested the stock could head back to $4 and would therefore buy puts to make money.

SoundHound AI stock slumped 11.17% to $14.07 on Monday amid the DeepSeek-induced sell-off, and was down an incremental 7.39% in premarket trading. 

The stock ended 2024 with a gain of 836%, reaching an all-time high of $24.98 on Dec. 26. It has since lost 29%.

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