2024-03-15 08:00:00 ET
Summary
- SoundHound stock has surged nearly 340% over the past year, outperforming the S&P 500 easily.
- The company expects its revenue to reach $100 million by 2025, with a potential 2-year CAGR of 48%.
- SoundHound's long-term model suggests a gross margin profile of over 70% and an EBIT margin of over 30%.
- I argue why the market hasn't gone FOMO over SOUN's valuation, notwithstanding its recent surge.
- Questions must still be asked whether SoundHound can sustain its growth momentum, as it's not yet profitable.
SoundHound Stock Surged Nearly 340%
SoundHound AI, Inc. (SOUN) is a $2.7B market cap company focusing on voice AI. The company believes its proprietary technology affords SoundHound substantial opportunities into an estimated TAM (across various verticals) worth more than $160B by 2026. Given SoundHound's FY23 revenue of just $46M, I'm not surprised that AI investors have attempted to chase its upside potential. Accordingly, SoundHound AI has surged nearly 340% over the past year, easily eclipsing the S&P 500 ( SPX ) ( SPY ) performance. As a result of SOUN's remarkable recovery, the stock re-tested highs last seen in May 2022, hovering below the $9 level as of this week's trading. While SOUN's significant upside is seemingly attractive, given its massive TAM, nearly 70% of its float is in the hands of the retail public. With institutional investors accounting for less than 20% of its outstanding shares, I assessed that SOUN could be vulnerable to significant volatility if its execution falters over the next two years....
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SoundHound AI: No Overhype Warning Yet But Could Be Close