SoundHound AI stock has seen significant growth, but concerns remain about costs, organic growth, and cash flow

From Nasdaq: 2024-12-12 05:25:00

SoundHound AI (NASDAQ: SOUN) has seen its stock soar over 600% this year, now with a market cap of over $5 billion. However, questions remain about its ability to control costs, grow organically without acquisitions, and improve cash flow to sustain its momentum heading into 2025.

SoundHound’s impressive sales growth of 89% to $25.1 million in the last quarter was overshadowed by operating expenses rising 112% to $58.9 million, resulting in a doubled operating loss of $33.8 million. Investors are watching closely to see if the company can manage its costs effectively.

While recent acquisitions have fueled SoundHound’s growth, investors are wary of the company’s ability to sustain this growth organically. With the quarter-over-quarter growth rate being a crucial indicator, any signs of stagnation could raise concerns about the company’s core business demand.

Cash flow is a major concern for SoundHound investors, as the company has burned through $75.8 million in the past three quarters, leading to a 49% increase in average share count. Without positive cash flow, the company may need to resort to issuing more stock, potentially diluting existing shares and impacting stock price.

Despite a successful 2024, uncertainty looms over SoundHound AI’s future performance. If the company cannot address its profitability, growth, and cash flow concerns, it may not be a wise investment heading into 2025. Investors are advised to closely monitor these issues before considering SoundHound AI as a potential buy.



Read more at Nasdaq: 3 Big Question Marks for SoundHound AI Stock Heading Into 2025