SOUN - Robust SaaS Growth At SoundHound AI But Risky Customer Concentration

2024-06-01 10:00:00 ET

Summary

• SOUN continues to underperform the wider market, with the stock retesting its previous support levels and massively shorted, implying near-term volatility.
• While the SaaS company has reported robust top line and backlog growth, its profit margins have been impacted by the recent SYNQ3 acquisition.
• Readers must also note that two customers comprise 48% of its FQ1'24 top-line, with the high concentration being highly risky in the event of non-contract renewal.
• SOUN continues to trade at a notable premium compared to its peers as well, offering interested investors with a minimal margin of safety.

We previously covered SoundHound AI, Inc. ( SOUN ) in March 2024, discussing the sudden rise in its stock prices then, thanks to Nvidia's ( NVDA ) stake disclosure and the growing demand for voice AI technology with Large-Language Model integration as a proprietary SaaS in both cloud-native and hardware-embedded platforms....

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