SoundHound AI, Inc. (SOUN) Faces Challenges Amidst Negative Outlook

Fundamental Analysis

SoundHound AI, Inc., ticker SOUN, has a market capitalization of $432.61 million and 217.39 million outstanding shares. The company is listed on the NASDAQ stock market. As per the last close on August 8, 2023, the stock was priced at $1.99. It saw a decline of $0.04 or 1.97% from its previous close. The stock traded between $1.90 and $2.00 during the last trading session, reflecting a rather narrow trading range.

Over the year, the stock has ranged between a low of $0.93 and a high of $5.11. The considerable distance between the 52-week low and high suggests the stock has fluctuated greatly during this period. A negative EPS of -$0.37 compounded by a negative PE ratio of -5.38 paints a grim picture in terms of profitability.

The company has recently released its Q2 earnings report. SoundHound AI reported a quarterly loss of $0.10 per share, which was less than the Zacks Consensus Estimate of a loss of $0.12 per share. This signifies an improvement when compared to the loss of $0.19 per share a year ago. The company's ability to achieve better-than-expected losses exhibits good financial management. However, the overall bearish sentiments towards the firm's equity raise, as well as concerns about the company's revenue growth rates and financial stability, have influenced the stock negatively.

Technical Analysis

The technical indicators show mixed signs. The 14-day Relative Strength Index (RSI) is at 15, suggesting that the stock is in the oversold territory. This could indicate that a price reversal might be in the pipeline as the stock is considered undervalued at this level. However, the stock may continue its downtrend due to absence of support.

The Moving Averages paint a somewhat gloomy picture. The 50-day moving average (MA) is at $3.24, and the 200-day MA is at $2.47, both of which are considerably higher than the last closing price of $1.99. This suggests that the stock is on a downtrend in the short- to mid-term. Additionally, the negative 3-month MACD of -0.64 reinforces this bearish outlook. Furthermore, the Average True Range (ATR) stands at 15.35, indicating potentially high volatility.

Stock Prediction

Given the lack of support level combined with high volatility and bearish medium-term trends, one may expect the stock to further decline in the next trading sessions. However, the extremely low RSI may also prompt a price reversal due to oversold conditions. Potential investors should watch the stock closely for signs of bottoming out.

Assuming market conditions remain consistent, based on our analysis, the stock price for the next trading day could trade close to or below its last closing price of $1.99, and may maintain this trend during the upcoming week.

Evaluation

SoundHound AI, Inc. at this stage seems to be a risky investment due to its instability and negative profitability. While the firm's less-than-expected Q2 loss is a positive sign, the bearish technical indicators and concerns about the firm’s financial position and future revenue growth overshadow these minor gains. The lack of any immediate support level could lead to further downside. Therefore, based on the existing data and taking into consideration the company's fundamentals and technical picture, SOUN is currently recommended as a "Sell".