Soundhound drops 57% from the peak. Buy Soun Stock now?

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Soundhound (Soun) is the voice technology company behind AI (AI) solutions for conversation, and we have seen its inventory take a hit in recent months. After surged to a high of $24.98, stocks plummeted past 57% from their peak, falling nearly 49.4% since the start of the year. Over the past 12 months, stocks still have grown by 158%, but recent sales have been detrimental to a significant value from market capitalization.

Part of the downward pressure came from Nvidia (NVDA)’s decision to end its position at Soundhound. The move, combined with wider macroeconomic uncertainty, surprised investors and contributed to a sharp decline in stocks. In addition to concerns, it is a high rating from the company. Soundhound is currently trading at a steep price range (P/S) ratio of more than 46.6 times, meaning the market is already priced in many positives.

However, the foundations of Soundhound show signs of strength. Its revenue growth is accelerating. In the first quarter of 2025, Soundhound’s topline skyrocketed 151% year-on-year. This follows an impressive increase of 101% in the fourth quarter 2024, 89% in the third quarter and 54% in the second quarter. The acceleration in topline growth rate reflects the growing demand for Soundhound’s AI-driven voice technology.

The company’s momentum appears to be sustainable as its addressable market is rapidly expanding among companies in multiple sectors that employ voice AI technology. Furthermore, with its diverse customer base and strong sales pipeline, Soundhound is well positioned to capitalize on the growing demand.

Soundhound has produced impressive results and its business momentum could be maintained. In its latest quarterly report, the company announced its first quarter revenue of $29.1 million, up 151% from the previous year. Additionally, Soundhound is taking steps to diversify its revenue customer base. This was the first time that none of the customers accounted for more than 10% of their total revenue. This is a noticeable change that reduces customer concentration risk and reflects the company’s expansion in various industries.

Customer demand is being built. Reservations continue to climb year-on-year and year-on-year, reflecting the growing interest in Soundhound’s Voice AI solutions. This traction is particularly visible in restaurants and enterprise sectors where location growth and customer service applications are accelerating. Meanwhile, in the automotive segment, Soundhound benefits from rising average selling prices thanks to deeper integration of its generative AI capabilities.

Management is confident about the future, citing large pipelines and the ever-growing Total Addressable Market (TAM). This will see the Soundhound grow significantly over the next few years. The number of OEMs and restaurant chains is increasing, showing enthusiasm for the company’s voice commerce solution. This is suitable for future growth.

Soundhound’s strategic acquisition is also paying off. The SYNQ3 integration already helps Soundhound upsell its existing product suites to a broader customer base. With the acquisition of Allset, the company is able to connect restaurant partners with growing automotive customers, creating a unique Voice Commerce Ecosystem. Meanwhile, the Amelia acquisition has helped Soundhounds invade new industries and has also expanded their presence with existing merchants.

Operationally, Soundhound continues to evaluate and improve certain low margin legacy contracts, increasing profitability or phased out altogether. These efforts, combined with increased revenue, are expected to drive sequential improvements in adjusted EBITDA throughout the year.

In particular, the company focuses on the path to profitability. With several cost discipline measures already in place, Soundhound has reiterated its hopes to reach adjusted EBITDA profitability by the end of 2025.

Given valuation concerns and macroeconomic uncertainty, not all analysts support buying Soun stock. As a result, the stock holds a “medium buy” consensus rating.

Still, the current pullback could represent a compelling entry point as Soundhound is still in the early stages of an attractive growth story, and as demand for Voice AI technology is increasing across the industry, it could represent a compelling entry point.

On the date of publication, Amit Singh had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published barchart.com

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