SOUN Stock: Analysts Say This $4 AI Stock Could Triple

Can SOUN stock really triple?

0:00 This AI stock trades for about $4 and the average analyst price target is around $12. That means that analysts think that it could triple. And even the most cautious analysts covering the stock has a price target above the current price. So, either Wall Street knows something or the market doesn't, or the market knows something that Wall Street won't admit. We're going to find out which one of those is true in early November. The company is SoundHound AI, ticker symbol S O U N. So, what does SoundHound actually do?

What SoundHound AI actually does

0:25 SoundHound makes voice AI, which basically just means software you talk to instead of type to. If you've ever ordered at a drive-thru and the voice taking your order was suspiciously polite and never got your fries wrong, there's a decent chance that was SoundHound. It was pretty smooth. Julie is very nice and she understood everything very easily. It's also in cars. So, when you tell your car to find a gas station or turn up the heat, SoundHound is one of the companies powering that.

0:55 And lately it's been pushing into AI agents, which are bots that don't just answer questions, but actually do things for you. Like booking that massage appointment or maybe that appointment to get your nails done or processing a refund. Well, a lot of the wins came out of our new platform that we call Oasis. It's It's been decades in the making. Oasis stands for Orchestrate the Agent System. It's agentic AI for enterprises. Now, let's talk about why the bulls are a little bit giddy here.

The bull case: growth, cash and no debt

1:28 The first thing is growth. And in its most recent quarter, SoundHound brought in about 61.9 million of revenue, up 45% from a year ago, and it beat what analysts expected. Management also raised its revenue outlook for the full year with the top end at $260 million. The next thing is the balance sheet. SoundHound has over $200 million of cash and no debt at the end of the quarter. So, it's not about to run out of money tomorrow. And the last thing is the price.

1:51 SoundHound hit an all-time high of $24.98. And today it's around $4.40, which is roughly 82% lower. Now, let's talk about the targets because the average depends on where you look.

SOUN analyst price targets: $6 to $20

2:01 Depending on the data source, the average 12-month target land somewhere between about $11.50 and $12.57, which is still almost triple today's price. On the high end, HC Wainwright has a $20 price target, and a few other analysts sit around $17. And on the low end is Piper Sandler with a hold rating and a $6 price target, which is the most cautious target on the stock, and it's still above where SoundHound trades today. But, here's the part that none of the bulls like to talk about.

Analysts are already cutting targets

2:27 A year ago, the average target was a little over $17. So, analysts have already been cutting their price targets. Now, that cuts both ways. It means these targets aren't totally stale, but it also means the analysts have been chasing the stock down, and they could keep doing that. This deal is getting worse all the time.

The bear case: losses, dilution, competition

2:45 Now, I've got to give you the other side, the not fun part, the bearish part, because it is my goal to make this channel as honest as possible. The biggest risk is that SoundHound is still losing money. Last quarter, it lost about 42.8 million, and it's still burning cash. The next risk is dilution. SoundHound pays a lot of its people in stock, about 80.6 million worth last year, and it has a history of selling new shares. Feel like I keep explaining dilution with this pizza analogy, and I don't really know if I need to, but basically just think about a pizza, where your pizza gets cut into more slices.

3:15 So, even if that pizza is getting bigger, your slice might not actually get bigger. And finally, there's competition. Big tech companies are all building voice AI, too, and SoundHound has to win deals against companies with a way deeper pockets. So, here's what I'll be watching when SoundHound reports in early November.

What to watch at SoundHound earnings

3:31 First, does revenue keep beating expectations? Growth is the whole reason anyone owns the stock, so a miss would really hurt. Second, are the losses shrinking? Investors are a lot less patient with money-losing companies than they used to be.

Would I buy SoundHound AI stock?

3:42 So, what would I actually do here? My thought is that SoundHound is a high-risk, high-reward type of bet. The business is clearly growing, but the losses and the dilution are real. So, if you own SoundHound AI, you've got to be okay with both of those. I don't own any of the stock now. If I owned it, I'd keep the position pretty small because it's is the type of stock that could get cut in half and I like my sleep at night. And I'd be watching that earnings report that's going to drop in November very closely.

4:07 I am not a financial advisor, so do not take this video as advice. It is for entertainment purposes only. And as always, if analyst price target is just an opinion, it's not going to be a guarantee and a lot of the times they are wrong. So now I want to hear from you.

$4 trap or $4 bargain?

4:21 Is SoundHound AI a $4 trap or a $4 bargain? Let me know in the comments. So check out this video right here.