SoundHound AI stock fell Wednesday even though the artificial intelligence voice technology firm delivered a beat-and-raise third-quarter report. One analyst downgraded SOUN stock on valuation.
Late Tuesday, the maker of conversational AI voice technology said its Q3 sales rose 89% year over year to $25.1 million. Analysts had expected $23 million in sales. SoundHound lost 6 cents a share in the period, vs. a loss of 9 cents a share a year earlier and Wall Street's target of a per-share loss of 7 cents.
For the full year, it forecast sales of $83.5 million, based on the midpoint of its outlook. That would represent 82% growth over 2024. Analysts had been looking for $82.6 million.
Further, for 2025, it guided to sales of $165 million vs. the consensus estimate of $152.1 million.
On the stock market today, SOUN stock dropped 17.1% to close at 6.27.
SoundHound's technology is used by companies to interact with customers in call centers and restaurant drive-thrus. Its voice-response technology also can be found in cars and televisions.
SOUN Stock Downgraded
Ladenburg Thalmann analyst Glenn Mattson on Wednesday downgraded SOUN stock to neutral from buy but kept his price target of 7.
"Our downgrade is a function of a rapid share price gain, coupled with a model that shows significantly higher losses than our previous expectations," Mattson said in a client note. "That said, we expect the company will grow into this valuation, and emerge stronger over time."
Elsewhere on Wall Street, D.A. Davidson analyst Gil Luria reiterated his buy rating on SOUN stock with a price target of 9.50.
"SoundHound reported another strong quarter of impressive revenue growth that was above expectations," Luria said in a client note. "Demand remains high for SoundHound's solutions as it landed another top 10 global QSR (quick-service restaurant) brand among other key customer wins and expansions resulting in rapid backlog growth."
SoundHound boasts seven of the top 20 quick-service restaurants worldwide as customers. In the quarter, it landed one of the largest pizza brands and now has three of the top four pizza QSRs as clients, Luria said.
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