SoundHound AI (NASDAQ:SOUN) Stock Declines 6.1% - What Should Investors Do?

SoundHound AI, Inc. (NASDAQ:SOUN) experienced a notable decline of 6.1% on Monday. The stock reached a low of $12.70 and was last seen trading at $13.23. During midday trading, roughly 22,504,969 shares changed hands, marking a significant decrease of 66% compared to the average daily volume of 65,407,559 shares. Prior to this drop, the stock had closed at $14.09.

Analysts' Perspectives

Wall Street analysts have mixed opinions regarding SoundHound AI's future. HC Wainwright maintained a "buy" rating, setting a price target of $26.00 for the stock. Conversely, LADENBURG THALM/SH SH noted a "neutral" rating, assigning a lower price target of $7.00. DA Davidson echoed a similar sentiment with a "buy" rating, but with a reduced price objective of $9.50. Wedbush raised their target price significantly from $10.00 to $22.00 while advising an "outperform" rating. In total, three research analysts rate the stock with a hold rating, whereas four analysts have issued a buy rating, resulting in a consensus rating of "Moderate Buy" and a target price of around $12.07 according to MarketBeat data.

Stock Performance Overview

The stock's 50-day moving average stands at $13.29, while its 200-day moving average is $7.84. SoundHound AI has a market capitalization of $4.88 billion and carries a price-to-earnings (P/E) ratio of -36.67, indicating negative earnings. The company's beta sits at 2.63, reflecting high volatility compared to the overall market. Additionally, the firm maintains a quick ratio of 2.58 and a current ratio of 2.58, with a moderate debt-to-equity ratio of 0.13.

Recent Earnings Report

In its latest quarterly earnings report released on November 12, the company announced an earnings per share (EPS) of ($0.06), exceeding the analysts' estimates of ($0.07) by a margin of $0.01. Despite a negative net margin of 163.58% and a challenging return on equity of -55.58%, SoundHound AI reported revenues of $25.10 million, surpassing expectations of $23.02 million for the quarter. This revenue reflects an impressive year-over-year increase of 88.7%, although the company had reported an EPS of ($0.09) during the same quarter last year. Analysts predict that SoundHound AI, Inc. will report an EPS of -0.38 for the current fiscal year.

Insider Activity Analysis

Recent insider transactions have raised eyebrows among investors. On December 23, Director Lawrence Marcus sold 20,000 shares at an average price of $20.47, totaling a transaction value of approximately $409,400. Following this sale, Marcus's ownership fell to 108,117 shares, valued at around $2,213,154. Additionally, CEO Keyvan Mohajer sold 465,394 shares at an average price of $15.04 on December 9, amounting to nearly $7 million. After this transaction, the CEO currently holds 2,299,148 shares worth approximately $34.58 million. These sales reflect a decrease in their respective shares of about 15.61% and 16.83% over the past few months. In total, insiders have sold approximately 2,782,918 shares, valued at $45,391,343, over the last three months.

Institutional Investor Movements

Changes in institutional ownership highlight shifting investor interests in SoundHound AI. In the fourth quarter, ST Germain D J Co. Inc. raised its position in the company by 33.2%, acquiring 3,008 shares valued at $60,000. Oppenheimer & Co. Inc. increased its stake by 11.0% during the third quarter, now holding 19,000 shares worth approximately $89,000. Other institutional investors like Integrated Wealth Concepts LLC and Signaturefd LLC have also raised their stakes modestly. Currently, institutional investors hold 19.28% of SoundHound AI's total shares.

Company Overview

SoundHound AI, Inc. specializes in developing independent voice artificial intelligence solutions. The firm provides tools for businesses in various industries, such as automotive, TV, and customer service, focusing on delivering high-quality conversational experiences. Key products include the Houndify platform, which offers a suite of tools for building custom voice assistants, as well as SoundHound Chat AI, designed to pull real-time information and provide informed responses.

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