SoundHound AI (SOUN), a pure-play artificial intelligence (AI) voice solutions company, rose to prominence after Nvidia (NVDA) announced an investment in the company last year. This under-the-radar company has since surged to become a major player in the AI voice recognition industry, demonstrating incredible growth. However, on Feb. 14 this year, Nvidia disclosed in a 13F filing that it had sold its entire stake in SoundHound AI. Losing Nvidia's financial backing could be disadvantageous for the company.
To add to the concerns, on March 4, SoundHound announced a delay in filing its annual report (Form 10-K) for the fiscal year ending Dec. 31, 2024. The company attributed the delay to the complexities associated with its recent acquisitions of Synq3 in January 2024 and Amelia Holdings in August 2024. The company intends to file its Form 10-K within the 15-day extension provided by the SEC, which should occur around March 18. This delay has raised concerns among investors, pulling its stock down by 6% on Tuesday.
Valued at $3.8 billion, SOUN stock has plummeted by 48.8% year-to-date, a stark contrast to last year’s 854% gain. Let’s find out if this delay is a red flag for SOUN stock, or just a minor hiccup.
A Red Flag or Just a Hiccup?
Delays in filing financial statements may indicate underlying issues within a company, prompting increased scrutiny from investors and regulators. We saw the same thing happen with Super Micro Computer (SMCI), which delayed filing its annual and quarterly reports to assess internal financial reporting controls. While the company has filed its delayed financial statements now, it may take some time before it regains investor trust. Furthermore, Super Micro has a history of financial reporting issues and insider sales issues, which are reasons to avoid the stock for the time being.
Soundhound AI has no history of financial reporting issues, but the company stated that it has discovered material weaknesses in internal controls. This calls into question the accuracy and reliability of the company's financial reporting. Furthermore, the company has not provided any remedial solutions for how it is dealing with this issue. SoundHound AI attributed the filing delay to the complexities of acquisition accounting. The company stated that these transactions have created complex accounting challenges, necessitating more time to prepare accurate financial statements.
SoundHound Has A First-Mover Advantage, But Profitability is Still A Question Mark
While these issues are concerning, SoundHound had a first-mover advantage in voice AI solutions, resulting in exceptional growth in recent years. The company reported revenue of $34.5 million in the fourth quarter, up 101% year on year, owing to expanded partnerships with a more diverse customer base. Its technology is embedded in a wide range of products and services, including automobiles and consumer electronics, and it improves user interactions through advanced voice recognition capabilities. Nvidia did not specify why it was withdrawing from this investment. It could be due to SoundHound's failure to turn a profit so far. In Q4, the company reported adjusted net losses of $0.05 per share, compared to $0.04 per share during the same period last year. Analysts do not expect the company to be profitable in the next two years, according to consensus estimates.
SoundHound's voice AI technology has been integrated into a variety of industries, including automotive and hospitality. The company has formed partnerships with well-known brands such as Mercedes-Benz, Hyundai, Kia, and Genesis, integrating its technology into vehicles to improve driver and passenger experiences. Collaborations with Burger King UK and Peet's Coffee have resulted in voice-enabled ordering systems, which have improved customer service and operational efficiency in restaurants.
Despite investments in strategic acquisitions and expansion plans, SoundHound AI ended the quarter with $200 million in cash and no debt. Due to this rapid expansion, SoundHound AI increased its full-year 2025 revenue guidance to a range of $157 to $177 million, in line with the consensus estimate of $166.17 million. Analysts expect revenue to further rise by 29.5% in 2026.
What Are Analysts Saying About SOUN Stock?
Overall, Wall Street rates SOUN stock as a “Moderate Buy.” Following its fourth-quarter performance, H.C. Wainwright analyst Scott Buck reaffirmed the stock's “Buy” rating with a $26 price target. Buck is impressed by the company's consistent organic growth, especially in high-demand industries like automotive, healthcare, and financial services. Furthermore, Buck is intrigued by the company's strong financial position, which includes a large cash reserve and no debt. He sees this flexibility as useful for strategic expansion, future growth initiatives, and potential acquisitions.
Similarly, D.A. Davidson and Wedbush analysts also reaffirmed their “Buy” ratings for the stock. Of the six analysts covering SOUN, three give it a “Strong Buy” rating, while three suggest a “Hold.” Its average price target of $14.67 suggests an upside potential of 44.5% from current levels. Plus, the highest target price of $26 implies a potential upside of 156.1% within the next 12 months.
The Bottom Line on SOUN Stock
SoundHound AI continues to make significant progress in the voice AI industry, with strong financial performance, strategic partnerships, and innovative product offerings. However, the company's lack of profitability raises a red flag. While SoundHound AI has filed for an extension within the time frame allowed, repeated delays or failure to address internal control weaknesses may attract regulatory attention and penalties. Investors should monitor the company's progress on these issues and wait until the March 18 deadline before making any investment decisions.
