SoundHound AI Stock Surges and Falls
SoundHound AI shares experienced a significant 21% surge on Thursday following the announcement of its acquisition of enterprise AI software firm Amelia for $80 million. This strategic move aims to expand SoundHound's presence in the conversational AI space by tapping into new verticals and brands. However, the stock saw a 5% drop in extended trading after the company reported its quarterly results, despite exceeding earnings and revenue estimates. This decline may be attributed to a larger GAAP net loss compared to the previous year, creating some investor concern.
Understanding the Technical Chart Pattern
SoundHound's stock price is currently navigating within a descending triangle pattern. This chart pattern involves a trendline of lower highs and a horizontal line of lows. While typically considered bearish, it can also indicate the continuation of an uptrend if formed after a previous upward movement. This is the case for SoundHound, especially after closing above the 50-day moving average with significant trading volume, suggesting potential for an upside breakout.
Key Upside Price Levels
Investors should keep an eye on specific upside price levels that could gain traction if the stock breaks the descending triangle's top trendline at approximately $5.75. A breakout supported by high trading volume could trigger further buying and potentially a short squeeze, given that over 26% of the stock is held in short positions. Further upward momentum might target $8.60, where profit-taking could occur near historical price peaks. If bullish sentiment prevails, SoundHound shares might test the $15 level, challenging previous highs from May 2022.
Downside Price Levels to Watch
On the flip side, the descending triangle's lower trendline around $3.50 is crucial to monitor. A breach below this level might lead to declines towards key support at $2.60 and $1.60. Following the 21% increase, the stock closed at $4.95 in after-hours trading, reflecting some post-market weakness.
Conclusion
Investors in SoundHound AI should remain vigilant, given the stock's volatile movements influenced by recent acquisitions and quarterly earnings. Monitoring technical price levels could provide valuable insights into potential market directions, offering opportunities for both short-term and long-term investment strategies.
