Ticker Reports for March 18th
2 Shorted Stocks Under Fire: Do Bulls or Bears Have It Right?
Two of the most-hyped industries in recent years—artificial intelligence (AI) and green hydrogen energy—have each produced a number of breakout star stocks, the result of widespread investor enthusiasm for the transformational potential of new technologies. However, even within a highly popular industry not every company can succeed all the time, and one company in each of those two spaces has emerged as a contender for most-shorted stock as of mid-March 2025.
SoundHound AI Inc. (NASDAQ: SOUN) and Plug Power Inc. (NASDAQ: PLUG) have each experienced massive spikes in popularity and share price in recent years—SoundHound late in 2024 and early into the new year and Plug Power in 2021. Now, these firms have attracted a high degree of short interest among investors, who are banking on them to continue to fall in price into the future. But is it time to join the bears or take a contrarian, bullish view of these two companies while they each trade at levels far below their peaks?
SoundHound's Short Interest Rises 19%, Though Revenue Growth and Market Expansion Impress
Short interest in voice AI platform developer SoundHound has surged in recent weeks, climbing by about 19% in the month leading to March 14, 2025. As of that date, the short percent of float is more than 34%. Shares of SoundHound plunged early in the year alongside news that chip leader NVIDIA Corp. (NASDAQ: NVDA) recently liquidated its entire position of under 2 million shares, although it could be that the second-largest company by market capitalization was simply looking to align its investments with its core offerings.
Plus, despite SoundHound's recent price drop, it may still raise bearish investors' valuation concerns based on its price-to-sales ratio of 48.0. Finally, bears can point to SoundHound's recent history of fairly significant share dilution—the share count increased by about 50% over the last year—as a potential barrier to future growth.
On the other hand, SoundHound bulls can cite the company's excellent growth trajectory, including fourth-quarter revenue that came in just over double the prior-year quarter's and 85% year-over-year (YoY) revenue improvement compared to 2023. The company also recently raised its full-year 2025 revenue guidance to be in the range of $157 to $177 million, which would mean another year of revenue roughly doubling (at least).
SoundHound has seen successful penetration of a variety of markets, including restaurants, healthcare, insurance, automotive, and more. Though competition remains stiff, SoundHound's customer base and brand recognition are strong and continuing to grow.
Plug Power Sees Short Interest Drop, Focuses on Cost Savings and Green Hydrogen Amid Market Challenges
Hydrogen fuel cell developer Plug Power has actually seen a slight drop in short interest in the last month, although the short percent of float remains high at 31.5% as of March 14, 2025. Domestic and international policy changes and geopolitical turmoil have slowed the global transition to clean hydrogen, and Plug Power now sees the data center backup power generation market impacting its business only by 2028 or 2029. Revenue was hit hard in the latest quarter by production delays and other factors, charges related to asset impairments and bad debt mounted, and overall costs remain high.
In early March 2025, Plug Power announced plans to reduce costs through staff reductions, operations consolidation, and other measures expected to generate between $150 million and $200 million in annualized cost savings. The company's customer demand still outpaces its production capacity, but in January it received Department of Energy (DoE) approval for its new Limestone plant in Texas.
Plug Power is also shifting part of its focus to encompass customers interested in transitioning from grey hydrogen (created using fossil fuels) to green hydrogen, which the company says is significantly simpler than other portions of the hydrogen fuel cell market. The company has also managed to improve service and hydrogen margins relative to 2023.
Between these two firms, SoundHound may have the immediate advantage for bullish investors because of its accelerating top-line growth. However, those willing to wait out challenges may see a wholesale shift toward green hydrogen that could benefit Plug Power over the long term. Both companies continue to face significant headwinds, though, so investor caution is advised in either case.
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ARK Innovation Fund Bets Big on Bitcoin—Will It Pay Off?
The United States economy is showing signs of weakness, as seen in slowing inflation from consumers and businesses alike. With lower readings in reports like the CPI and PPI, investors can safely assume that demand is pulling back across the board. This is behind the lower readings in consumer spending and retail sales so far into the first quarter of 2025.
While this is bearish on a fundamental basis, a reaction portrayed in the S&P 500 and its 10% pullback so far into the year, there are other implications that go beyond the current price action.
This is where the opportunity lies for investors looking to align their portfolios with the best odds moving forward. Lower inflation readings in the economy will push the Federal Reserve (the Fed) to consider cutting interest rates earlier than expected.
This scenario is why those from ARK Innovation ETF (NYSEARCA: ARKK) decided to go on what’s called a “risk-on” path for their holdings by choosing exposure in the areas of the market that tend to do well when rates are lowered.
The exchange-traded fund (ETF) decided to buy up to $80 million worth of Bitcoin as of March 2025, as well as a new stake worth $5.2 million in shares of Coinbase Global Inc. (NASDAQ: COIN) as a secondary bet on better risk-on performance.
Can The Strategy Pull ARKK Out of Its Funk?
Over the past month, the innovation ETF declined by as much as 26.6% to underperform the S&P 500 and other risk-on asset classes, which might have prompted its managers to rethink their allocation process and strategy in light of today’s economic landscape.
Looking at the iShares Bitcoin Trust (NASDAQ: IBIT) as a comparison, the Bitcoin tracker was only down by 13% during the same month, but it is actually still up by 22.2% over the past year. This performance shows that the market is not only accepting Bitcoin as a real asset class now but also an opportunity for ARK to improve its outlook by holding it.
There are signs of approval in the market upon this new strategic shift as well, as investors can note the recent 52.1% boost in holdings for the ARK fund coming from those at Centaurus Financial, bringing them to a net position of $504 thousand as of March 2025.
While not the largest position in the ETF, this new allocation does imply that other institutions see ARK as making the right decisions by investing in a risk-on asset that could potentially do well if the Fed reacts to the slowdowns in economic data in the coming quarters.
Coinbase: More Upside Beyond Bitcoin
More than buying Bitcoin, ARK also made a bet that Coinbase, the middleman in Bitcoin buyers and sellers, will do well in this future scenario. Looking to the way Wall Street analysts feel about Coinbase stock today, investors can also safely assume that ARK made another right call.
With a consensus price target of $316.6, these analysts now forecast that Coinbase stock could rally by as much as 73% from where it trades today. Considering that Coinbase stock has fallen during this S&P 500 pullback, and now trading at a 52% of its 52-week high, investors are facing a fantastic risk-to-reward ratio for the stock here, as most of the downside might already be priced in today.
On a more subtle note, investors can see that the broader market is also looking to a bullish scenario in Coinbase stock, as it is now willing to pay up to 4.5x on a price-to-book (P/B) basis for the company, which is a steep premium to the financial sector’s average 2.7x valuation today.
While some value investors will call this expensive, seasoned professionals will remind them that the market is always willing to overpay for the stocks that it believes can outperform the peer group as well as the broader market in this case.
CleanSpark Stock: Another Worthy Mention
While this company might be a bit from a big fund like ARK to invest between, retail investors have no issues here. Bitcoin miner CleanSpark Inc. (NASDAQ: CLSK) now trades at 32% of its 52-week high, giving investors an even better ratio on risk-to-reward than Coinbase.
Of course, this trade pays off only if Bitcoin does end up rallying on a Fed reaction. Analysts now see a consensus price target of $21.6 per share today. This view not only calls for the stock to flirt with its 52-week high prices again but also for an implied rally of as much as 171% from where the stock trades today.
This time, investors would also be aligning themselves with other institutions as well, considering that the Vanguard Group has recently built up a stake worth up to $181 million in CleanSpark stock, or 7% ownership in the company as an optimistic bet on Bitcoin.
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Arqit Stock Soars as NVIDIA's GTC Fuels Quantum Excitement
Arqit Quantum Inc. (NASDAQ: ARQQ) experienced a stock price surge on March 17, 2025, closing up 56.93% at $23.54. This jump reflects a growing wave of investor interest in quantum computing and, more specifically, the critical need for quantum-resistant cybersecurity solutions.
The timing of the surge coincides with heightened anticipation surrounding NVIDIA (NASDAQ: NVDA)'s GTC conference, a major technology event featuring a dedicated "Quantum Day." This further fuels speculation and excitement in the sector.
Arqit, a UK-based company, provides quantum-safe encryption software designed to protect against current and future cyber threats, including those posed by quantum computers.
Arqit's Stock Surge
Arqit's stock price has been volatile over the past few months, reflecting the dynamic nature of any advancement that emerges from the technology sector. This volatility was exemplified by the fact that at the market opening on March 18, 2025, the stock gave back approximately 20% of its nearly 57% gain before quickly reversing again to recover those losses. Furthermore, the stock's 52-week range, spanning from a low of $3.72 to a high of $52.79, highlights this inherent volatility.
Arqit's recent financial disclosures can provide further context for understanding its current market position. For the fiscal year ended September 30, 2024, the company reported revenue of $293,000, a decrease compared to the $640,000 reported in FY2023. This decline is attributed to a strategic shift from one-time, perpetual software licenses to a recurring revenue model based on operational licenses.
This transition, while impacting short-term revenue, is intended to build a more sustainable and predictable income stream. The company's operating loss for FY2024 was $24.6 million, an improvement over the $54.5 million loss in FY2023. Arqit's year-end cash position of $18.7 million gives the company sufficient runway to maintain operations while the new revenue strategy is implemented.
NVIDIA's GTC Conference and the Quantum Computing Boom
NVIDIA's GTC conference is widely regarded as a premier event in the technology industry, attracting developers, researchers, and investors from around the globe. While traditionally focused on artificial intelligence (AI) and high-performance computing (HPC), this year's conference marks a significant milestone with the inclusion of its first-ever "Quantum Day." This dedicated focus underscores the rapidly growing importance and potential of quantum computing.
The "Quantum Computing: Where We Are and Where We're Headed" session is a particular highlight, featuring chief executives from leading quantum computing companies. While Arqit's CEO is not a scheduled presenter, the company operates within the same ecosystem and is subject to the same market forces and investor sentiment that is currently driving the sector.
NVIDIA's involvement as a potential provider of hardware and software infrastructure for quantum computing adds another layer of significance to the event and the industry's overall trajectory. The broader excitement surrounding quantum computing is not limited to this single event; it is a trend built on advancements across the sector and growing recognition of its transformative potential.
Securing the Future: Quantum-Safe Cybersecurity
Arqit Quantum's core business revolves around providing quantum-safe encryption software. Its flagship products, QuantumCloud™ and SKA-Platform™, utilize a symmetric key agreement approach. This method offers a fortified defense against cyberattacks, including those potentially enabled by future quantum computers.
A key differentiator for Arqit is its compliance with the National Security Agency's (NSA) Commercial Solutions for Classified (CSfC) Components and Symmetric Key Management Requirements. This adherence to stringent security standards positions Arqit favorably within the high-security sectors it targets.
The company's target market includes government agencies, defense contractors, telecommunications providers, financial institutions, and any enterprise requiring the highest levels of data protection. Arqit's technology is designed for ease of integration. Its lightweight software agent can be deployed on a wide range of devices, minimizing disruption to existing infrastructure. This approach aligns with the principles of Zero Trust Network Access, a security framework gaining increasing traction.
Strategic partnerships are central to Arqit's go-to-market strategy. A notable collaboration with Sparkle, a global telecommunications service operator, has resulted in a successful proof-of-concept for a quantum-safe Network-as-a-Service (NaaS) offering.
The Quantum Security Gauntlet
The quantum computing and cybersecurity sector is intensely competitive, and Arqit faces challenges from established technology giants, all of which are investing heavily in quantum technologies. Numerous other companies are developing quantum-safe cryptographic solutions, creating a crowded and dynamic market. This intense competition presents a significant hurdle for Arqit, requiring continuous innovation and differentiation to maintain a competitive edge.
Another key challenge is market adoption. While the threat of quantum computers to existing encryption methods is well-understood in technical circles, convincing organizations to adopt new and relatively untested security solutions requires overcoming inertia and demonstrating clear value. Furthermore, while recent offerings have bolstered Arqit's financial position, its ongoing operating losses highlight the need for substantial revenue growth to achieve long-term sustainability.
Quantum Security's Next Chapter
Arqit Quantum's recent stock surge is undeniably linked to the broader excitement surrounding quantum computing, amplified by events like NVIDIA's GTC conference. The company's focus on quantum-safe encryption addresses a critical and growing need, and its technology has garnered recognition and strategic partnerships.
However, Arqit operates in a challenging and rapidly evolving market. Success will depend on its ability to execute its business strategy, secure widespread adoption of its solutions, and navigate a sector populated by formidable competitors. The future for Arquit looks promising, but the path forward requires innovation and adept execution.
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