SoundHound AI Inc. (SOUN) plummeted 5.17% on Monday amid concerns over its lofty valuation and lack of profitability despite rapid revenue growth.
The voice AI technology company has seen its stock soar over 900% in the past year, driven by strong demand for its AI-enabled speech recognition services. However, some analysts warn that SoundHound AI's current market capitalization of $8.05 billion is trading at nosebleed valuations, nearly 50 times its projected 2025 revenue.
While SoundHound AI is expected to continue posting impressive revenue growth of 79%-85% in 2024 and 86%-110% in 2025, the company remains unprofitable and has been increasing its outstanding shares through secondary offerings and stock-based compensation. This has raised concerns that the stock could face a significant correction if SoundHound AI fails to meet its own lofty expectations.
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