SoundHound AI Shares Drop 2.9% as Analysts Debate Future Ratings

SoundHound AI, Inc. (NASDAQ:SOUN) experienced a decline of 2.9% in its share price during trading on Thursday, October 12, 2023. The stock reached a low of $11.25 before closing at $11.29. A total of 52,458,454 shares were traded, representing a 15% increase from the average session volume of 45,572,676 shares. The previous closing price was $11.63.

Analysts Offer Mixed Ratings on SoundHound AI

Recent research reports have highlighted varying opinions regarding SoundHound AI’s stock. Northland Capital Markets upgraded the company from a “hold” to a “strong-buy” rating on August 8, 2023. Meanwhile, Oppenheimer initiated coverage with a “market perform” rating on September 11, 2023.

Wedbush maintained an “outperform” rating, setting a target price of $16.00 for the stock on the same day. Northland Securities also raised its rating from “market perform” to “outperform” with a target of $14.50. In a more recent report, HC Wainwright increased its price target from $18.00 to $26.00, giving the stock a “buy” rating on October 16, 2023.

Overall, analysts have provided a mixed outlook, with one analyst assigning a “strong buy” rating, five with a “buy” rating, three with a “hold” rating, and one with a “sell” rating. According to data from MarketBeat, SoundHound AI currently holds a consensus rating of “Moderate Buy” and a consensus target price of $17.42.

Quarterly Earnings Exceed Expectations

In its most recent earnings announcement on November 6, 2023, SoundHound AI reported earnings per share (EPS) of ($0.03), surpassing analysts’ expectations of ($0.09) by $0.06. The company generated revenues of $42.05 million for the quarter, exceeding forecasts of $40.48 million.

Despite achieving a 67.6% increase in revenue year-over-year, SoundHound AI reported a negative net margin of 211.16% and a negative return on equity of 93.64%. For the fiscal year 2025, the company has set guidance at EPS. Analysts project that SoundHound AI will post an EPS of ($0.38) for the current fiscal year.

Insider Transactions Raise Questions

In recent insider trading activity, Vice President Majid Emami sold 41,167 shares on October 8, 2023, at an average price of $20.00, totaling $823,340.00. Following this transaction, Emami retained 608,186 shares valued at approximately $12,163,720, marking a 6.34% decrease in his holdings.

Additionally, CEO Keyvan Mohajer sold 118,654 shares on the same day for a total of $2,373,080.00. Post-sale, Mohajer owns 2,342,613 shares valued at about $46,852,260, reflecting a 4.82% decrease in his position. Over the past ninety days, insiders have collectively sold 787,260 shares, valued at $13,973,056. Corporate insiders now hold 9.17% of the company’s stock.

Institutional Investment Trends

Institutional investors have been active in adjusting their stakes in SoundHound AI. Northwestern Mutual Wealth Management Co. increased its holdings by 83.1% during the second quarter, owning 2,336 shares worth $25,000 after adding 1,060 shares. Danske Bank A S established a new position valued at approximately $26,000 in the third quarter.

Advisors Asset Management Inc. raised its stake by 68.4%, now owning 2,519 shares worth $27,000 after acquiring an additional 1,023 shares. Similarly, Investors Research Corp increased its holdings by 62.4%, owning 1,822 shares valued at $29,000 after purchasing 700 shares. Hedge funds and institutional investors collectively own 19.28% of SoundHound AI.

SoundHound AI, Inc. specializes in independent voice artificial intelligence (AI) solutions, serving various industries including automotive, television, and customer service. The company offers products such as the Houndify platform, which provides tools for developing conversational voice assistants, and SoundHound Chat AI, which integrates real-time knowledge domains.

As the company continues to evolve, the fluctuations in its stock price and the mixed ratings from analysts indicate a complex landscape for investors.