SoundHound Deep Dive (Undervalued?)
Date: 6/6/2023
Deep Dive Counter: 4
Good morning all, I hope you are making great returns!
Thank you so much for the support in my previous Deep Dives! Your support keeps me motivated to continue doing them.
If you haven't already checked out the Medium page, feel free to do so! I post all my Deep Dives there for your reference to check back on later.
I found another stock I like. Usually I stay away from penny stocks, but this one has a unique twist and I think it is worth a Deep Dive.
(In this article I will be referencing SoundHound as SoundHound or Soun)
History
SoundHound
I. SoundHound, not to be confused with SoundCloud, was originally founded in 2005 by a number of graduates from Stanford University, most notably being Kevyan Mohajer. Up until that time, Mohajer has founded a few different dot com companies, but began focusing more of their time with Soun.
II. The main focus of SoundHound was music discovery, where users can listen to music and identify it. Since its development, SoundHound has helped businesses integrate voice assistants to their products from companies such as Hyundai, Mercedes Benz, Mastercard ( $MasterCard(MA.US$) and Snapchat ( $Snap Inc(SNAP.US$).
III. In 2012 SoundHound announced that they now have over 100 Million members globally.
IV. In 2014 SoundHound becomes the first music-search product available as a wearable.
V. In 2015 SoundHound becomes the first music recognition service for autos, partnering up with Hyundai in the new Genisis model.
VI. In 2020 SoundHound won the 2020 Webby Award for Productivity (Voice) in the appstore.
VII. In 2021 SoundHound announces they plan to go public by merging with Archimedes Tech SPAC Partners & Co.
VIII. In 2022 SoundHound is inaugurated into the NASDAQ under $SoundHound AI(SOUN.US$
IPO
I. As mentioned, Soun struck a deal with Archimedes Tech SPAC and IPO'd in 2022 with a value of $2.1 Billion.
Unlike other IPO's, SoundHound has been heard of and used before in by consumers through the appstore and or by certain vehicles on the market. With a solid foundation, business model and reputation, it is clear to me why the IPO was so successful initially. They also chose a good time to IPO as well. Although they missed the money printer hype, SoundHound was considered a solid buy. However, their earning were not super impressive and came in mostly neutral.
Despite not so appealing earnings, on May 17 Sound Hound announced their Hyundai partnership, followed two days later with another announcement that they will be releasing the "First-of-its-Kind Voice AI Ordering Service For Restaurants and POS Integration with Square" SoundHound Announces First-of-its-Kind Voice AI Ordering Service for Restaurants and POS Integration With Square - SoundHound AI and the Market loved it....for bit.
But what happened on May 6th? Why did the price tank? We all know that answer. Rate Hikes. Numerous companies traded lower in the following days since the announcement of the Federal Reserves largest rate hike since 2000 (Federal Reserve announces biggest interest rate hike since 2000). This lead SoundHound to halt to the downside over 17% and since then we have not seen much action on the daily chart.
Despite news of Soundhound joining forces with HARMAN to deliver conversational voice AI to auto customers, SoundHound reporting significant growth in November 2022 (SoundHound AI Reports Record Quarter With Significant Growth Across All Key Metrics - SoundHound AI), launch of SoundHound Dynamic which was said to be groundbreaking for human-computer interaction; 2022 did not see much action.
All 2022 news here: News Releases - SoundHound AI
Taking a step back.
I. Before we continue onwards to 2023, we need a good understanding of what SoundHound actually is and what they offer. So far we understand where Soun came from, and how they have grown as a company over time, despite the share price remaining steadily to the downside. But what do they actually do? What are the specific services do they provide? and how can we use this information to make some money!
Products
Soundhound has a ton of products. This is usually a good sign for a company that investors look at when preforming their initial due diligence. It tells us that this company is diverse, innovative, and does not put all their eggs in one basket. Some of their products that stand out to me are SoundHound for Restaurants, Intelligent Transcription, Text-To-Speech, Content Domains, SoundHound Chat AI App, and especially their Music App. With this said, I am going to go through each of the ones I mentioned and write a brief summary of what it does and how it works.
SoundHound For Restaurants
I. The purpose of SHR (an abbreviation I came up with for simplicity) is to maximize sales, increase the number of orders taken and promote productivity within staff. They do this through two products. SmartAnswering and SmartOrdering. SmartAnswering is essentially an answering service when you call the establishment. We've all heard it: "Thank you for calling...." ect. This ensures that 100% of calls are answered and users can find where they want to get to through a smooth directory process. SmartOrdering on the other hand is where a user will take those phone orders and automatically process them through different products such as Toast, Square, Oracle and more. Their hope is to eliminate hold time, save money and provide better customer service. More on the companies later (That's the fun part).
SoundHound's Intelligent Transcription
I. Soun's real time transcription is built by Automatic Speech Recognition and voice AI technologies in order to provide a seamless conversation between users in real time. An application of this would be phone-help services. For example, you call Amazon customer support, you don't speak a familiar language that the company has enough employees for (this is an example), the intelligent transcription product will use machine learning to deliver better comprehendible transcriptions for the support agent to assist you. This way they can build a better intent, transcribe in multiple environments and quickly identify custom topics, pre-built topics and other entities used to find you a solution faster. A great product.
SoundHound's Text-To-Speech
I. Their TTS allows for a companies to use unique voices to promote their brands. These are useful for companies that wish to express themselves in the way they want to using a voice that will fit them best. There are tons of voices to choose from and many languages to deliver a companies message. They do this through Advanced Speech Synthesis, Neural Text-To-Speech solutions and Edge + Cloud Based TTS. If you have a company and you want to express your mission statement in a specific way, this tool may be useful to you.
SoundHound's Automatic Content Recognition
I. This one was not originally on the list, but I am going to include a link to where you can find out all about it. There are tons of use cases from the European Legislation, Royalty Discounts, Automated Report Creation and more. The end goal of this product is for music recognition and royalty assignment. You can read more here (Automatic Content Recognition (ACR)).
SoundHound's Chat AI App
I. This should come as no surprise to investors that SoundHound has created their own ChatGPT look-alike. However, with TTS and their other AI recognition products, SoundHound has created an app where users can speak naturally, ask questions, and get the results they are looking for. They use SoundHound Generative AI models, OpenAI Models (ChatGPT), and other models as well to improve their machine learning algorithm CaiLAN and CaiNET or Conversational AI Language / Conversational AI Network. A solid competitive product.
SoundHound's Music App
I. Most of have heard of SoundHound before. Whether you use it, or Shazam, SoundHound has been a competitor and the first of its kind in many different fields. Users can find their favorite songs through their massive library, or even hum the song. The app also can connect with Apple Music or Spotify ( $Spotify Technology(SPOT.US$). There are two versions. A paid version and a free version. Each deliver music recognition, and a GUI similar to a SoundCloud / Spotify experience.
There are a ton of more products SoundHound provides, feel free to check them out here:
Today
I. With a $660 Million market cap, Soun is competing with other companies with a billion+ market cap in the newly announced $CHAT ETF ( $ROUNDHILL GENERATIVE AI & TECHNOLOGY ETF(CHAT.US$). This gives me the opinion that some are pricing in Soun as undervalued, if it can compete with others such as $NVIDIA(NVDA.US$.
II. Soun recently reported a 56% increase in revenue along with their cash position. This is crucial to investors to see if the company management is performing, and it appears they are doing much better than expected.
III. Soun has a lot of large partners and investors. From Qualcomm ( $Qualcomm(QCOM.US$) to Mastercard ( $MasterCard(MA.US$), it is clear to me that Soun has a solid relationship with larger companies.
IV. This is the part that shocked me most. Soundhound's investors.
There are a ton of companies that directly invest in SoundHound. Samsung, Nvidia, Mercedes Benz, Hyundai, Oracle, and many more large cap companies.
Daily
These are all that I can really recognize for right now. There was a gap to the upside with the AI hype in early 2023 but was filled in around the beginning of March after their earnings. Soun is on an upwards trend, but it could break to the downside more. I have a position in Soun right now, but I may average down. Speculators believe that Soun will become more prominent in electric cars as AI is integrated more into EVs. Right now Soun feels neutral. Not extended to the upside, but maybe slightly extended to the downside.
Conclusion
I. This took me a while to make. I am aware that I skipped some information in 2022 and 2023, but seeing the daily price action from the chart it is clear to me that Soun is one of two things. Either incredibly undervalued given its potential influence in the economy, or not doing to well overall as can be seen from some of the past earnings release. Soun, ultimately, has a way to go. Hopefully some news about doing business with Tesla comes out and we can see some more investors taking notice of this stock.
II. I think Soun is a "Sound" (lol) long term investment. They have tons of different products, and with the new AI hype, Soun can absolutely tune into some newer profits. Whether that will be today, tomorrow, next week or a while from now, I think Soun at around this price, if not a dollar lower, could be a good entry position. I am not a financial advisor, nor should you listen to me or make trades off of what I suggest, but for me personally I am going to hold Soun for the long haul on Webull.
III. Should you invest in SoundHound. That is entirely up to you. In this post, nothing should be seen as financial advice or be taken as a "you should buy" or “this stock will go up”, because you definitely may lose money along the way. Trade at your own risk, understand what you are getting into and make a decision based on your own personal goals, finances, and whatever else you base your trades on. None of what I say should influence you, that's not my intent.
To be clear, my intentions are looking at the finances, history, and current trends about SoundHound. I could be entirely wrong, so do your own research. There could be other reasons why, the price goes up or down, but for now these are my thoughts and ideas into SoundHound. How you choose to act, and perceive this information including future profits and losses is entirely up to you.
I hope you find this information informative and consistent. I enjoyed making this post and I hope it finds you well.
Thank you for reading, again your reactions, comments, shares and views motivate me to continue making Deep Dives into different companies and find where we could potentially make some money. Right now SoundHound is on a tear downwards from its previous significant Higher High of around $3.50 landing at about $3 currently.
I currently still believe the overall market is extended far too much to the upside so Soun may see more decrease. I plan on averaging down through it and seeing where it goes. I will say though, if by the next earnings Soun is under $1, or has a bad report, I may sell some of my long position for a loss. This is because there are other opportunities out there and I do not normally hold any penny stock for the long run.
Soun is different to me given its long exposure to AI, the numerous products the company provides, their crazy holding in the before mentioned ETF and the suprising number of huge companies investing within the company.
Let me know what stock I should look at next! Your comments and feedback are greatly appreciated and I cannot thank you enough for reading my articles. + the three followers on Medium :). All of this information and articles I write are done by me entirely for free for you to access anytime on Medium. Whether or not I will monetize it someday is not known or thought of right now, but I am happy to share knowledge to anyone. What I know may help you, and what you know may help me.
Thank you again for reading.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Moo Contributor
Alkaline Analyst
All Deep Dives:
https://medium.com/@alkalinedeepdives
1090Followers
9Following
4267Visitors
Follow
AkLiOP : Thank you for reading!
AkLiOP : RIVN dive soon