SoundHound stock is down 10% on Wednesday: here's why

Shares of SoundHound AI Inc (NASDAQ: SOUN) are down 10% this morning after the speech recognition company announced an “Equity Distribution Agreement”.

How many shares will SoundHound sell?

The $1.50 billion company based out of Santa Clara, California says it will sell up to 150 million shares through “Managers” including Citigroup and Barclays Capital.  

$SOUN will “reimburse the Managers” for some costs related to the aforementioned agreement. They will also be “entitled to a commission at a fixed rate of 2.5% of the gross sales price of shares sold”, as per the press release on Wednesday.

The news arrives more than a month after the Nasdaq-listed firm reported an 80% annualised growth in revenue as well as adjusted EBITDA for its fourth financial quarter.

SoundHound stock is now down more than 50% versus its year-to-date high.

SoundHound stock has struggled recently

SoundHound AI Inc also confirmed in its press release today that it “may at any time suspend offers under the agreement or terminate the agreement.”

Its shares have been under pressure lately partially due to a short-sell report from Capybara Research that blasted the artificial intelligence company for “fake revenue, fake bookings, and fake AI”.

Still, Glenn Mattson – a Ladenburg Thalmann analyst recommends owning SoundHound stock as the Nasdaq-listed firm trumps peers in AI powered voice capabilities (find out more).

It is also worth mentioning here that the artificial intelligence leader – Nvidia Corp invested in $SOUN earlier this year.