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Soundhound AI (SOUN) is an audio and speech recognition company developing language, sound, and voice recognition technology. They offer independent voice platforms powered by artificial intelligence (AI), enabling enterprises to deliver quality conversational experiences to their customers. SOUN boasts a wide-ranging product portfolio that includes the Hound voice assistant, Houndify for developers, and SoundHound music app platforms. Headquartered in Santa Clara, California, they operate in the U.S., Canada, Germany, France, and Japan.
Shares of Soundhound have rocketed to a gain of over 162% so far in 2024, but the stock still trades 45% below its 52-week high.
What Made Soundhound Stock Spike?
On Feb 14, AI chip giant Nvidia (NVDA) filed its first-ever 13F with the Securities and Exchange Commission (SEC), disclosing its investments in five AI companies. One of the five companies was Soundhound, and the news of Nvidia’s stake in the company helped to drive a sharp rally in the shares. However, SOUN pared those gains after a mixed earnings report.
Soundhound announced its Q4 results on Feb. 29, posting revenue of $17.15 million, which came up just short of estimates for $17.75 million. The loss per share $0.07 was also slightly wider than the expected loss of $0.06. Adjusted EBITDA for the quarter improved considerably, though, arriving at a loss of $3.7 million - up 80% YoY from the year-ago deficit of $18.8 million.
On a full-year basis, revenue stood at $45.9 million, an increase of 47% YoY, while the loss per share narrowed to $0.40 from last year’s $0.74. The adjusted EBITDA loss of $35.9 million improved 51% YoY from $72.8 million.
Looking forward to 2024, the company forecasts revenue in the range of $63 million to $77 million, and it expects revenue to hit the $100 million mark in 2025.
With a total valuation of just $1.7 billion, Soundhound had an impressive order backlog of $661 million at the end of 2023, which doubled from 2022. This shows Soundhound’s potential to increase revenue significantly from here.
What Do Analysts Think About SOUN Stock?
Analysts at Cantor Fitzgerald recently downgraded the stock from an “Overweight” rating to “Underweight,” while also reducing the price target from $5.80 to a Street-low of $4.90. The analyst cited the company’s valuation as “difficult to justify” because of the “infancy of SOUN's business, opaqueness of its operating model, decelerating organic growth, lack of capex spends, loss of customers, and growing competition from big tech.”
On the other hand, DA Davidson reiterated its “Buy” rating on the stock while raising its target from $5.00 to $7.50. The change comes on the back of Soundhound’s Q4 results, with the analyst commenting that, “SoundHound is winning market share and has customers knocking at its doors.”
Out of the 6 analysts tracking the stock, 4 have a “Strong Buy” rating, 1 has a “Hold” rating, and 1 has a “Strong Sell” rating on the stock. That works out to a consensus “Moderate Buy” rating for SOUN stock, with a mean price target of $7.15 - indicating expected upside potential of 28.6% from current levels.
