SoundHound AI (SOUN) Faces Class Action Lawsuit: Shareholders Must Act Before May 27 Deadline

SoundHound AI, Inc. (NASDAQ: SOUN), a leader in conversational AI and voice recognition technology, has become the subject of a high-stakes securities class action lawsuit filed by Levi & Korsinsky LLP. The litigation, targeting shareholders who purchased shares between May 10, 2024, and March 3, 2025, alleges that the company engaged in securities fraud by concealing material weaknesses in its financial reporting and overstating its operational integrity. With a critical deadline looming, affected investors must act swiftly to preserve their rights to potential compensation.

The Allegations: A Systemic Failure in Financial Reporting

The lawsuit accuses SoundHound of making materially false or misleading statements to investors, primarily revolving around six key issues:
1. Material Weaknesses in Internal Controls: The company allegedly failed to adequately account for corporate acquisitions, including the Amelia and SYNQ3 deals, due to flawed financial reporting processes.
2. Overstated Remediation Efforts: SoundHound claimed it had resolved these weaknesses but allegedly exaggerated its progress.
3. Inflated Goodwill: The reported goodwill from the Amelia Acquisition was falsely elevated, requiring subsequent corrections.
4. Increased Costs and Delays: The material weaknesses created risks of delays in SEC filings and higher costs to resolve accounting errors.
5. Misleading Public Statements: All disclosures during the class period were deemed false or misleading due to these concealed issues.

The complaint asserts that these misrepresentations artificially inflated SOUN’s stock price during the period. When the truth began to emerge—triggering sharp declines in share value—investors suffered significant losses.

Financial Context: Growth Amid Red Flags

SoundHound’s financial performance during the class period presents a paradox. Revenue surged 72.9% year-over-year to $11.6 million in Q1 2024, fueled by partnerships like its deal with Perplexity AI. However, underlying profitability metrics were dire: a negative net margin of 188.57% and a staggering -1,955.68% return on equity. While revenue growth is positive, these red flags suggest operational challenges that may have been obscured by the alleged misstatements.

Implications for Shareholders: Act Before May 27

The lawsuit’s May 27, 2025 deadline is a critical juncture for affected investors:
- Lead Plaintiff Deadline: Shareholders who suffered losses must contact Levi & Korsinsky by this date to qualify for lead plaintiff status.
- No Obligation to Participate: Even those still holding shares may qualify for recovery, with no upfront costs or obligations.

Levi & Korsinsky, a nationally recognized securities litigation firm with a $750+ million recovery track record, is representing plaintiffs. The firm’s involvement signals confidence in the case’s merits, particularly given its expertise in complex financial fraud cases.

Conclusion: A Clear Path Forward for Investors

The allegations against SoundHound AI highlight systemic governance failures that may have misled investors about the company’s financial health. With a 52-week trading range of $3.10–$14.80 as of March 2025, shareholders who invested during the class period face material losses. The lawsuit seeks to address these harms through legal recourse, leveraging SoundHound’s own disclosures and financial irregularities as evidence.

For investors, the stakes are clear: acting before May 27 ensures eligibility to participate in potential recoveries. As Levi & Korsinsky emphasizes, even those still holding SOUN shares may qualify—making this a rare opportunity to mitigate losses tied to alleged corporate misconduct.

Final Note: The case underscores the importance of due diligence in evaluating companies with rapid revenue growth but questionable profitability metrics. For SOUN investors, the path forward is straightforward: act promptly to safeguard your financial interests.

Data sources: Levi & Korsinsky LLP press releases, SEC filings, and third-party financial analytics.