SoundHound stock price analysis: Is SOUN a good AI investment?

SoundHound (SOUN) stock price has moved sideways in the past few months as the momentum it had a few months ago has faded. It was trading at $5.37 on Tuesday as traders repositioned for the upcoming earnings, which will provide more color about its growth trajectory. 

What is SoundHound?

SoundHound is a technology company that has become popular in the new artificial intelligence era. It is a firm that creates tools that help companies deliver quality conversational experiences to companies. This is a big market, which Juniper Research estimates will be worth $165 billion by 2016.

There are many areas where AI voice can be used. For example, companies are leveraging SoundHound’s technology to deliver customer care solutions to their customers. Also, restaurants can leverage its technology to improve the ordering process, saving substantial sums of money at a time when wage growth is growing.

SoundHound’s technology is also used by electronic manufacturers like smart TVs and smartphones. Some of the top clients include the likes of Stellantis, Honda, Hyundai, Dunkin, and White Castle.

SoundHound has expanded its business by acquiring Amelia, a company that makes AI agents for enterprises. Its technology is used to manage critical tasks and processes and help employees to be more productive. It spent $80 million to fund the acquisition.

SOUN business is growing

SoundHound’s business has been growing, and analysts expect it to keep expanding in the coming years. Its annual revenue rose from over $7.7 million in 2019 to over $45.9 million in 2023. 

The challenge, however, is that this growth has come at a great cost. Its annual loss has moved from $64.5 million in 2019 to over $89 million last year. Its trailing twelve-month net loss has risen to $108.5 million.

The most recent results showed that SoundHound’s business was doing well, with its revenue growing by 54% to $13.5 million. However, the gross margin dropped to 63%.

The net loss also grew to $37.3 million. Most notably, the company had a cumulative subscriptions and bookings backlog of over $723 million, more than double what it had last year. 

The company ended the last quarter with over $201 million in cash and short-term investments. Part of this cash came from the $100 million it raised in 2023 and some of the investment it received from NVIDIA.

Analysts expect that the company’s revenue will continue growing this year. Its revenue is expected to grow to $23.02 million. For the year, SoundHound is expected to have $82 million in revenue, an 80% increase from last year. 

SoundHound’s 2025 revenue is expected to be $152 million, a 84% increase from what it will make in 2023. The company has a long history of beating analysts’ estimates, meaning that its growth will continue.

The risk for the SOUN stock price is that the company may need to raise cash in the past few years. Its outstanding shares have risen from 194 million in 2023 to over 315 million.

Read more: SoundHound stock is getting closer to removing a huge overhang

SoundHound stock price analysis

SOUN chart by TradingView

The daily chart shows that the SOUN share price has moved sideways in the past few months as investors focus on its growth. It has formed an ascending channel shown in black. This channel connects the lowest and highest swings since May 10. It has moved between the 50% and 61.8% Fibonacci Retracement levels.

SOUN stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA). It has also formed a bearish flag chart pattern. It has also formed a head and shoulders pattern, a popular bearish sign.

Therefore, the stock will likely remain in this range ahead of its earnings results on December 11. It will then have a bearish breakout, with the next point to watch being at $4.0.

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