SoundHound Stock Drops. Why the Nvidia-Backed AI Company Disappointed the Market.
Updated Nov 13, 2024, 10:06 am EST / Original Nov 13, 2024, 6:19 am EST
SoundHound AI stock was falling early on Wednesday following its earnings. The issue looks like one of high expectations, with a “sell the news” reaction after a steep runup ahead of the report.
SoundHound shares had risen 33% in the last five days through Tuesday’s close. That brought it back up to the levels last seen in the first quarter of the year after AI chipmaker Nvidia
SoundHound booked a loss of 6 cents a share on sales of
$25.1 million in the September quarter in its report after the close on
Tuesday. Analysts polled by FactSet had expected SoundHound to lose 7 cents a
share on sales of $23 million.
For the full year, SoundHound forecast sales of $83.5
million, based on the midpoint of its outlook, against a consensus forecast of
$82.6 million. For 2025, it guided to sales of $165 million, above analysts’
average estimate of $152.1 million.
Investors who had backed the stock coming into earnings
might have been hoping for a larger increase to its revenue forecast, as the
company diversifies its business beyond the automotive industry.
“SoundHound reported another strong quarter of impressive
revenue growth that was above expectations. Demand remains high for
SoundHound’s solutions as it landed another top 10 global QSR [quick-service
restaurant] brand among other key customer wins,” wrote D.A. Davidson analyst
Gil Luria in a research note.
Luria kept a Buy rating and $9.50 target price on SoundHound
stock.
Wedbush analyst Daniel Ives raised his target price on the
stock to $10 from $9, while keeping a Buy rating on the stock.
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