Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Investors Business Daily
Investors Business Daily
Business
KIT NORTON

This AI Stock Surged 350% In February. Is It A WallStreetBets Target?

On Thursday, Celsius Holdings stock surged more than 20% amid speculation of a short squeeze after the shares trended on the subreddit r/WallStreetBets site. On Friday, another stock is the top trending play on WallStreetBets and just happens to be down more than 20% in premarket action, after ending Thursday up 89% for the week.

SoundHound dropped ahead of regular trade Friday morning, falling around 23%. On Thursday, SOUN jumped 17%. Website ApeWisdom showed SOUN was the top trending stock on the subreddit r/WallStreetBets Friday. As of Thursday's close, SOUN stock had ballooned more than 346% in February.

SoundHound, a voice AI and sound recognition company, underperformed with fourth-quarter earnings and revenue late Thursday. The Santa Clara, Calif-based AI operation reported a loss of 7 cents per share. That was improved from a 15 cent-per-share loss a year ago, but just shy of the analyst target for a 6-cent loss.

The company reported sales of $17.1 million, up 80% compared to Q4 2022 but missing the consensus view of $17.75 million.

D.A. Davidson raised its 12-month price target on SoundHound stock to $7.50 from $5 early Friday. It kept a buy rating on the stock, the note said. Thefly.com reported that "demand for SoundHound's artificial intelligence solution remains elevated as the company won a new deal with a top U.S.-based electric vehicle maker and signed a contract with a large manufacturer that increases its unit volumes through 2037. Davidson is also upbeat about the company's newly established revenue source with a 'preeminent chip company.'"

SoundHound's stock action and status as the top trending stock on WallStreetBets comes after CELH surged Thursday after reporting Q4 earnings and revenue. Celsius stock rallied more than 20% Thursday. A reported 34.8% of Celsius shares were sold short before the start of the session. With CELH trending on WallStreetBets, it has been speculated that the group could have intentionally forced a short squeeze on the stock.

Short squeezes occur when the price of a heavily shorted stock rapidly moves higher, forcing investors to sell short to cover their positions, which adds more upward price pressure to the shares.

Meanwhile, Root Insurance also closed 89% higher for the week on Thursday, with shares up 296% in February. ROOT — which was not trending on WallStreetBets — advanced more than 6% in Friday's premarket action after surging nearly 15% on Thursday.

Keefe Bruyette upgraded ROOT to outperform on Monday, raising its price target to 22, from 10. Jefferies upgraded the stock to buy Friday, ratcheting its target to 40 from 10. The Jefferies note said, "The company executed a 'better-than-industry' target loss ratio this quarter, setting a path to profitable growth, market share gains and scalability for a viable business model," according to thefly.com.

Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.

YOU MAY ALSO LIKE:

Is Tesla A Buy Or A Sell?

Get Full Access To IBD Stock Lists And Ratings

Learning How To Pick Great Stocks? Read Investor's Corner

Is Rivian A Buy Right Now With The Cybertruck Hype?

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.