Last year was a big deal for stock splits. Large companies from Walmart In Chipotle Mexican Grill Starting such a business, Artificial Intelligence (AI), the hottest player in the growth industry on the market, has also joined the movement. Major chip manufacturers nvidiathe networking giant Broadcomand equipment manufacturers Super Microcomputer After prices skyrocketed last year, each was announced and completed the completed stock split.
And with each new stock split, the biggest question from investors was, “Which market giant is next to you to join this list?” These businesses do not change the basics of the stock or the company, but can generally be considered positive signs. (We’ll go into that more in more detail later.) For now, I’ll go to that investor question and whether one of today’s most explosive growth stories could be the next candidate for a stock split. Let’s think about it. I’m talking Sound Hound AI(NASDAQ: soun)a company that reported double-digit revenue growth quarter after the quarter and saw its stocks skyrocket over 800% over the past year. Let’s take a closer look.
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You may have never heard of Soundhound, but you may have interacted with the product without realizing it. The company is an AI expert and serves customers in industries such as automobiles, restaurants and healthcare. Soundhound’s voice products stand out from the crowd thanks to technology that brings high quality communication. You go through the general steps of converting your speech directly into meaning and translating your speech into text.
The company has launched products in the areas of “smart ordering”, vehicle intelligence and employee support.
All of this has led to significant growth after the quarter. In the most recent period, Soundhound reported an 89% increase in revenue to $25 million, reporting its expansion across the industry. Five different industries contributed revenues from 5% to 25%, respectively. Just a year ago, 90% of revenue came from the automotive sector. Soundhound is in a high growth mode, expanding its platform and industry-wide reach and investing in its technology. So it’s not surprising that the company has not yet made profits, it reports a net loss Generally Accepted Supplementary Principles (GAAP) Based About $21 million for the quarter.
Now let’s consider the possibilities Stock split. Companies often split the stock after large profits and can be clearly said that Soundhound saw the stock take off. The company has proven to be a popular option among investors looking for future AI winners.
By providing more shares to current holders, the stock split will lower the price of individual shares. This is what you need when your profits reach a very high level. For example, the level of around $1,000 per share may be a psychological barrier for some investors – they may hesitate to buy a share at this price, even if the valuation looks ok. Not there.
Stock splits do not change the basics of the company or stock, so if you already own the stock, the market value, the value of your holdings, and the valuation of the stock will remain the same. That’s why the stock is split on its own, not the reason for buying and selling the stock. However, stock splits can generally be considered positive because they can make stocks more accessible to a wider range of investors, and the moves of companies to split stocks are likely to be the case with management. It suggests that they are optimistic about the future and that the stock may continue. climbing.
As mentioned before, Soundhound stocks are rising sharply, but prices have not reached levels that make them difficult to access. Today it trades for around $15 per share. Additionally, stock splits do not lower the valuation, so Soundhounds actually don’t get cheaper for investors.
Soundhound has not split inventory in the past. This means there is no clues as to whether the company is suitable for such a business. But I don’t think the soundhound really needs stock splits now. So you wouldn’t think this AI player would become the next company to launch a split, even after a huge gain on the stock recently.
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Adria Cimino There is no position in any of the stocks mentioned. Motley’s fools have jobs include Chipotle Mexico Grill, Nvidia and Walmart. Motley Fool recommends Broadcom and the following options are recommended: Chipotle Mexican Grill for short term $58 for March 2025. To Motley’s fool Disclosure Policy.
