SoundHound AI (SOUN 2.24%) was like a yo-yo on Thursday morning. Shares of the artificial intelligence (AI) systems developer soared as much as 18.5% higher. By 11:05 a.m. ET, though, the stock was down 5.7%.
What's behind SoundHound AI's big swings today? It's not clear.
The company didn't make any announcements that would explain the initial gain or the subsequent sell-off. SoundHound AI submitted regulatory filings to the U.S. Securities and Exchange Commission (SEC) on Wednesday, revealing some recent stock sales by Morgan Stanley. However, those sales doesn't seem to be large enough to move the needle very much.
Perhaps some short-sellers could have been covering their positions early on Thursday -- making moves that drove the stock higher. Maybe once they completed their buying, the stock quickly fell. However, this is just a theory and can't be proven.
NASDAQ: SOUN
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What should investors make of SoundHound AI's volatility?
Should anyone be surprised by SoundHound AI's volatility? Nope. For a high-flying AI stock with a short percentage of float of over 15%, volatility comes with the territory.
SoundHound AI could (and probably will) continue to have big price swings in the future. Sometimes there will be straightforward reasons behind them, but sometimes not.
Is SoundHound AI stock a smart pick?
If you're a conservative, risk-averse investor, you'll be better off avoiding this stock. If you're an aggressive investor, I think the decision about whether to buy SoundHound AI depends on your mindset. Over the short term, the stock will almost certainly remain highly volatile and could give up much of its gains. Over the long term, though, SoundHound AI could be a big winner.
