Sign InSoundHound AI (SOUN) Stock Analysis: Short-Term Bearish Trend, Long-Term Potential
Summary
SoundHound AI, Inc. (SOUN) is currently in a bearish trend but is undervalued according to fundamental analysis, with a potential to move into a Buy territory after the upcoming earnings announcement, according to a comprehensive analysis of its stock performance and market sentiment on August 18, 2023.
Company Overview
SoundHound AI, Inc. (ticker: SOUN), listed on NASDAQ, is in the spotlight for this analysis.
Stock Performance
SOUN closed at $2.16 on August 18, 2023, reflecting a decrease of 1.37% from the previous day. The modest movement in price corresponded with a trading volume of 13.44 million, below the average volume of 19.13 million shares. Over the course of the trading day, this shares ranged in price from a low of $2.03 to a high of $2.20. For a broader perspective, the stock traded as low as $0.93 and as high as $5.11 within the past year. SOUN currently carries a market capitalization of about $470 million.
Technical Analysis
The Relative Strength Index (RSI14), used to measure the speed and change of price movements, is currently 45, suggesting the stock is neither overbought nor oversold. The 50-day moving average (MA50) stands at $3.11, while the 200-day moving average (MA200) is $2.45. These moving averages indicate a bearish trend as the current stock price is below them. Added to this, the Moving Average Convergence Divergence (MACD), another trend-following momentum indicator, exhibits a negative value at -0.568519, further validating the bearish sentiment.
The Average True Range (ATR), a volatility index, is high at 13.50, suggesting a potential for significant price movements. The stock has a support level of $2.06 and a resistance level of $2.23, which could be the potential bounce-back and pull-back points respectively for the stock.
Fundamental Analysis
The earnings per share (EPS) of SOUN is currently at -$0.37, reflecting losses on an individual share basis. Consequently, the Price to Earnings (PE) ratio stands at -5.84, which is not directly comparable due to negative earnings.
SOUN carries slightly over 217 million shares outstanding and is set to announce its earnings on November 8, 2023, which should offer more insight into the company's financial condition and performance.
Company News and Market Sentiment
News and sentiment around SOUN reveal recent mentions in discussions about under-valued AI penny stocks, indicating potential opportunities in this sector. The company's Q2 earnings announcement highlighted that it managed to beat the consensus revenue estimates, although it reported a loss which, however, was smaller than anticipated.
Discounted Cash Flow (DCF) Analysis
Based on the discounted cash flow (DCF) calculation, the stock's intrinsic value is estimated to be around $2.22, which is slightly higher than the current market price. This suggests the stock could be undervalued.
Market Consensus
Looking at the market consensus, one recommendation stands in the "buy" category, with no opinions in the "hold", "sell", or even "strong sell" territory.
Prediction
Given this context, the stock price might increase on the next trading day (August 21, 2023) and later continue in an upward trend over the following week, but volatility can be expected due to a high ATR value.
Evaluation
Taking into account all these facts and figures, the stock seems to be moving in a bearish trend in the short-term based on its technical indicators. However, its fundamentals also reveal undervaluation, and there is a "buy" market consensus. Furthermore, the news highlights the company’s potential in the AI sector.
Therefore, considering both the short-term bearish trend and the long-term potential, the evaluator categorizes SOUN as a 'Hold' for now, with the prospect of it moving into 'Buy' territory post the upcoming earnings announcement and potentially improved financials.
