Contrarian Value Ideas

[gfp927z]

Derf, >> SOUN <<

Nice going. I'm not that familiar with the company, other than seeing them on the best performing lists, etc. They seem to be well positioned, and have a connection to NVDA, and lots of momentum in recent months. So a 'hot potato', and looks like a large short position close to 25% (per YH Finance).

Chart-wise it looks like it could have another blast higher, getting through the previous March high ~10, and maybe up into the low-mid teens, but just a guess. Then maybe a run at the all time high up around 18-19 from 2022 (?) But plenty of volatility on the way, and it first has to get through the key resistance at 10. And a lot may depend on the broader market, and whether fear starts to dominate over greed, etc.

Fwiw, I always like to book profits. My dad would say that 'no one ever went broke by taking a profit', and it seems sensible to at least book some of the profits, and let some ride. Over the years I had some quick doubles on several high flying stocks, and then sold half and let the remaining 'free shares' ride. That worked out great with SMCI and several others. Everyone is different, but imo watching nice profits evaporate is worse than missing out on additional gains.

That said, the current chart setup is a quasi Cup + Handle, and if it can break through the March high (~10), that could be the signal for traders to pile in for more. So everyone will be watching the ~10 resistance area closely.


>>> Where Will SoundHound AI Be in 1 Year?


Motley Fool

By Chris Neiger

Dec 1, 2024


https://www.fool.com/investing/2024/12/01/where-will-soundhound-ai-be-in-1-year/


Key Points

The company is successfully tapping into conversational AI.

SoundHound AI's losses are narrowing.

The stock is relatively expensive right now.


The rapidly expanding artificial intelligence (AI) market is fueling growth among many tech companies, and SoundHound AI's (SOUN) strong position in voice-enabled products and services is benefiting from the trend.

SoundHound's stock has soared more than 250% over the past 12 months (as of this writing), leaving some investors wondering where the company will be one year from now. So, let's take a closer look at what's happening with SoundHound and what investors might expect from the company in the coming year.

How SoundHound is doing right now

SoundHound has successfully expanded its business lately, moving into new conversational AI markets and boasting more than 200 enterprise brands using its tech, including Chipotle Mexican Grill, Qualcomm, and Stellantis' automotive brands.

The popularity of its voice AI platform is evident from the company's third quarter (which ended Sept. 30) results, in which revenue rose 89% from the year-ago quarter to $25.1 million, outpacing analysts' consensus estimate of $23 million. SoundHound's non-GAAP loss per share of $0.04 was an improvement from a loss of $0.06 in the year-ago quarter and ahead of Wall Street's expectation of a loss of $0.08.

Not only were the company's third-quarter results solid, but SoundHound's revenue growth is likely to continue. Management recently issued 2024 revenue guidance of $83.5 million for the full 2024 year at the midpoint and then increased to $165 million in 2025. That represents substantial year-over-year sales growth for the company and outpaces analysts' consensus estimate of $152.1 million in revenue for 2025.

SoundHound's opportunity and one word of caution

SoundHound is already successfully tapping into the AI market, and its momentum comes as large companies ramp up their AI spending. According to SoundHound's management, companies will invest an estimated $175 billion to $250 billion in AI enterprise spending by 2027.

This could provide SoundHound with new growth opportunities over the coming year and beyond. The company just closed on its acquisition of Amelia, giving it more avenues for conversational AI growth in finance, healthcare, and insurance that haven't been tapped fully into.

But there are two things investors should be cautious about with SoundHound right now. The first is that the company isn't profitable. The company's losses narrowed in the third quarter, and analysts estimate the company's loss per share will continue to improve from $0.38 in 2024 to $0.27 in 2025. That's good news, but it'll take time for the company to reach profitability.

More importantly, SoundHound's stock is relatively expensive right now. The company's shares trade at a price-to-sales ratio of 35.9, which is far above the S&P 500's average of about 3.1.

That doesn't mean SoundHound's stock doesn't have more room to run, but some of the company's future benefits from an expanding AI market are likely baked into its current share price. So, if you're bullish on the company's long-term opportunity, adding a small position now and buying more shares if there's a pullback in the stock price might be a good strategy.

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