SoundHound AI (NASDAQ:SOUN) Stock Price Down 3.5% After Analyst Downgrade

Key Points

• SoundHound AI shares fell 3.5% to $4.11 after DA Davidson cut its price target from $10 to $5, while maintaining a Buy rating.
• Analysts overall have a Hold consensus and an average price target of $9.50; Cantor Fitzgerald also lowered its target, from $15 to $10, but kept an Overweight rating.
• Third-quarter revenue rose 48.5% year over year to $62.43 million and exceeded estimates, while adjusted profitability remains a longer-term goal: management is targeting the second half of 2027.

SoundHound AI, Inc. (NASDAQ:SOUN - Get Free Report) shares fell 3.5% during mid-day trading on Friday after DA Davidson lowered their price target on the stock from $10.00 to $5.00. DA Davidson currently has a buy rating on the stock. SoundHound AI traded as low as $3.88 and last traded at $4.11. 29,074,201 shares were traded during trading, an increase of 11% from the average session volume of 26,238,846 shares. The stock had previously closed at $4.26.

A number of other analysts have also recently commented on SOUN. Yorkville Ives initiated coverage on SoundHound AI in a research note on Monday, October 5th. They issued an "in-line" rating and a $6.50 price target for the company. Weiss Ratings raised shares of SoundHound AI from a "sell (e+)" rating to a "sell (d-)" rating in a research note on Thursday, October 15th. Cantor Fitzgerald decreased their price objective on shares of SoundHound AI from $15.00 to $10.00 and set an "overweight" rating for the company in a report on Friday. Wall Street Zen upgraded shares of SoundHound AI from a "strong sell" rating to a "sell" rating in a report on Saturday, October 24th. Finally, Oppenheimer reaffirmed a "market perform" rating on shares of SoundHound AI in a research note on Friday. One equities research analyst has rated the stock with a Strong Buy rating, three have assigned a Buy rating, four have given a Hold rating and one has issued a Sell rating to the company's stock. According to MarketBeat.com, the stock presently has a consensus rating of "Hold" and an average target price of $9.50.

Insiders Place Their Bets

In other SoundHound AI news, insider James Hom sold 38,730 shares of the stock in a transaction dated Tuesday, September 15th. The stock was sold at an average price of $6.33, for a total value of $245,160.90. Following the completion of the sale, the insider directly owned 1,105,555 shares in the company, valued at $6,998,163.15. This represents a 3.38% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, SVP Majid Emami sold 38,730 shares of the stock in a transaction dated Tuesday, September 15th. The stock was sold at an average price of $6.33, for a total value of $245,160.90. Following the completion of the sale, the senior vice president owned 834,253 shares of the company's stock, valued at $5,280,821.49. This trade represents a 4.44% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last ninety days, insiders have sold 288,758 shares of company stock valued at $1,828,598. Insiders own 8.84% of the company's stock.

Key SoundHound AI News

Here are the key news stories impacting SoundHound AI this week:

• Positive Sentiment: Management is targeting sustained adjusted EBITDA profitability in the second half of 2027 and plans roughly $120 million in cost reductions. The LivePerson acquisition and growth in recurring revenue are central to that plan. Q3 earnings call highlights
• Positive Sentiment: Commercial opportunities expanded through a SoundHound deal to bring its voice AI to about 20 million U.S. LG smart TVs and a broader partnership to integrate its technology across Ultraviolette’s electric vehicle lineup. Ultraviolette partnership expansion
• Neutral Sentiment: Third-quarter revenue reached a record $62.4 million, up 48.5% year over year. Reports differed on whether sales narrowly missed estimates, while the quarterly loss was narrower than some forecasts but the company remains unprofitable. Q3 results and outlook
• Neutral Sentiment: Cantor Fitzgerald lowered its price target to $10 from $15 but kept an Overweight rating, indicating continued optimism alongside a more cautious valuation. Cantor Fitzgerald price target
• Negative Sentiment: Investors remain concerned about rising AI-related costs, margin pressure, cash burn and ongoing losses; profitability is not expected until 2027. Those concerns appear to be outweighing the strong sales growth and upbeat longer-term guidance. Shares retreat despite guidance

Institutional Trading of SoundHound AI

A number of large investors have recently bought and sold shares of SOUN. Russell Investments Group Ltd. raised its holdings in shares of SoundHound AI by 2.8% during the third quarter. Russell Investments Group Ltd. now owns 128,543 shares of the company's stock worth $774,000 after acquiring an additional 3,561 shares during the period. Jacobi Capital Management LLC bought a new stake in SoundHound AI in the 3rd quarter valued at $94,000. Torrey Growth & Income Advisors lifted its position in SoundHound AI by 31.9% in the 3rd quarter. Torrey Growth & Income Advisors now owns 81,700 shares of the company's stock valued at $493,000 after acquiring an additional 19,750 shares in the last quarter. Fulcrum Asset Management LLP acquired a new position in SoundHound AI in the 3rd quarter worth $45,000. Finally, International Assets Investment Management LLC boosted its stake in SoundHound AI by 23.2% in the 3rd quarter. International Assets Investment Management LLC now owns 31,561 shares of the company's stock worth $191,000 after purchasing an additional 5,953 shares during the period. 19.28% of the stock is owned by institutional investors.

SoundHound AI Trading Down 3.5%

The stock's 50 day moving average is $5.56 and its two-hundred day moving average is $7.06. The stock has a market capitalization of $1.83 billion, a price-to-earnings ratio of -10.82 and a beta of 2.89.

SoundHound AI (NASDAQ:SOUN - Get Free Report) last issued its quarterly earnings results on Thursday, November 5th. The company reported ($0.05) EPS for the quarter, beating analysts' consensus estimates of ($0.12) by $0.07. The company had revenue of $62.43 million for the quarter, compared to analyst estimates of $61.71 million. SoundHound AI had a negative return on equity of 30.22% and a negative net margin of 67.45%. The company's quarterly revenue was up 48.5% compared to the same quarter last year. During the same period in the previous year, the company posted ($0.03) earnings per share. On average, research analysts anticipate that SoundHound AI, Inc. will post -0.39 earnings per share for the current year.

SoundHound AI Company Profile

SoundHound AI, Inc develops voice artificial intelligence and conversational intelligence technologies. Its platform is designed to enable people to interact with devices, applications and services using natural language, with capabilities including speech recognition, language understanding and conversational response generation.

The company's offerings include the Houndify platform, which businesses can use to create branded voice assistants and conversational interfaces. SoundHound AI also provides voice-enabled solutions for industries such as automotive, restaurants and customer service, allowing users to access information, control functions, place orders and engage with businesses through voice interactions.

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