On paper, the glorious Nvidia-backed SoundHound AI, absolutely crushed their recent earnings. However, instead of a roaring stock price that “should’ve” followed - we all got a case of the Wall Street Logic blues as the carnage sent shares tumbling 17% yesterday. 

(Source: Barrons) 

Meaning, if you’re scratching your head wondering why, don’t worry I was too. Especially since SoundHound wasn’t just hitting their targets—they were obliterating them. For example, SoundHound posted record revenue for Q3 2024, with a jaw-dropping 89% year-over-year growth, raking in $25.1 million. That’s $2 million more than Wall Street had predicted. What’s more is that they weren’t just flexin’ on revenue - SoundHound also managed to shrink its losses, reporting a loss of $0.06 per share compared to the expected $0.07.

So as you can see, it was a pretty solid quarter for SoundHound - practically bulging with girthy numbers. But apparently, first signs of a stock doing too well too fast has some nasty consequences. In short, SoundHound’s stock had already rallied a whopping 33% in the five days leading up to the report, thanks in part to the AI-fueled hype train and news that Nvidia holds a small stake in the company. Again, Nvidia, 2024’s GPU champion and presumably the future supplier of Skynet, sees some massive potential as they’re currently sitting on about 1.7 million shares of SoundHound. 

(Source: Giphy) 

However, the higher you fly, the harder you fall - and it looks like investors were banking on an even bigger beat… or maybe just an excuse to cash out while the getting was good. Which is why, following the report, Ladenburg Thalmann analyst Glenn Mattson, decided to single handedly send shares into the abyss as he downgraded the stock to a neutral rating. The reason? Well, he cited “significantly higher losses” than he was comfortable with.

“Uh, Glenn, did you miss the part where they shrank their losses? Or were you just in the mood to ruin everyone's day?” - Every SoundHound investor probably

(Source: Giphy) 

But, but, but… with that said, Mattison followed up his death sentence on Wednesday’s price action with an expectation that SoundHound will ultimately “grow into its valuation” and come out stronger on the other side. Translation: He fully expects investors will overreact to his downgrade like a friggin ‘degenerate teenager, but overall, it’s not all doom and gloom. 

So yeah, that was the cause of the insanity that ensued on SoundHound yesterday. But again, the reality is that SoundHound is actually killing it in the real world. For instance, the company’s voice technology is popping up in everything from drive-thrus to cars to call centers, and they’re diversifying like a true pro. Once known for being overly reliant on the auto industry (90% of revenue last year), SoundHound has spread its wings into sectors like restaurants, healthcare, and financial services. Now, their largest customer only accounts for 12% of revenue. That’s bigly. 

(Source: Yahoo Finance) 

What’s more, is that SoundHound also just snagged Amelia, an enterprise conversational AI leader, for $80 million to help them expand into even more verticals like insurance and finance. This alone should put some extra juice into the uncharted waters SoundHound is looking to dominate in the future.

(Source: SoundHound) 

For this reason, SoundHound ended up raising its revenue outlook for 2024 to $83.5 million, up from the previously expected $82.6 million. And for 2025? They’re gunning for $165 million, blowing past analysts’ estimates of $152.1 million. This has D.A. Davidson analyst Gil Luria keeping his “buy” rating firm, pointing out that demand for SoundHound’s solutions is “high,” with big wins in the quick-service restaurant (QSR) space. Not to mention that fact, that they’ve already locked down seven of the top 20 QSR brands globally, and they just signed another top 10 pizza brand. 

(Source: Giphy) 

Now with that said, sure a 17% drop in share price stings a bit, but don’t get lost in the red ink. SoundHound is growing like a weed, and they’re doing it smartly by diversifying and expanding their customer base. Maybe Wall Street’s just having a mood swing, but if you ask me, SoundHound’s future looks a hell of a lot brighter than the stock chart suggests.

Meaning, despite the knee-jerk clusterf**k, SoundHound is still very much in the game—just maybe don’t expect it to moon overnight. In the end, keep an eye on this stock going forward as it clearly has some yuuuge momentum within its core business. And as always, stay safe and stay frosty, friends! Until next time…

P.S. Life comes at you fast friends, and while your favorite online stock guru is out here struggling to make heads or tails on the markets short-term direction - our team and our premium members at Stocks.News are absolutely CRUSHING it. How so? Well it all comes down to back-to-back-to-back-to-back-to-back massive wins over the last few weeks. Don’t believe me? Click here to see for yourself once we drop our next alert. 

Stocks.News does not hold positions in companies mentioned in the article.