SoundHound AI (NASDAQ:SOUN) stock initially dropped Tuesday after Capybara Research released a short report targeting the company.
The investment research firm revealed it has taken a short position in SoundHound AI shares, claiming it is "peddling lies."
It is the second short report on the stock in a matter of weeks from the short-seller that previously accused SOUN of making a "desperate bid to cash in on [the] AI hype" on February 27.
After initially falling to a low of $7.60 per share in Tuesday's session, SOUN is now trading at $8.34, up 1.5%, as of 13:12 ET.
In its latest note, Capybara argues that SoundHound is "misleading investors about their AI capabilities" and that its AI product is below par.
"SoundHound pitches their product as world-class 'AI,' on par with ChatGPT, but this is not the case," said Capybara Research. "The Houndify product uses commodity speech recognition to search a manually programmed knowledge graph. And it only works for a small set of domains, such as weather, sports scores, etc."
Capybara also claims that SoundHound's products often return incorrect information and that its "speech recognition tech is a commodity service that competes with comparable products from Amazon, Google, Microsoft, Apple, Cerence, and many others."
The short-selling firm also goes on to claim that SoundHoundAI is hiding the fact that it has "lost some of its biggest customers, including Mercedes-Benz, Deutsche Telekom, and Netflix."
"We believe that SoundHound is worth $1.00 per share or less," concluded the firm.