SoundHound AI (NASDAQ:SOUN) sunk downwards by close to 6% yesterday, as the company announced that it would be delaying its annual report for the fiscal year that ended in December 2024.
According to SOUN’s notification, the company explained that its dual acquisitions of Synq3, Inc. and Amelia during 2024 created accounting complexities that prevented an on time filing. SOUN noted that it expects to file its Form 10-K within fifteen days by March 18th.
Yesterday’s losses were another blow in what has so far been a tough 2025 for the company, which is down over 50% for the year. The high-flying AI stock had been doing quite well beforehand, soaring to over 960% growth in 2024 on the strength of its voice AI technology.
Indeed, the company has been growing its clientele in numerous fields such as the auto industry, healthcare, and food services. Sales have also been increasing, and in its most recent Q4 earnings call last month SOUN reported revenues of $34.5 million, representing 101% growth year-over-year. Though the company is operating at a loss, its EPS of -$0.05 did beat analysts’ expectations of -$0.10.
So, what does the 10-K filing delay mean for the company? One investor known by the pseudonym Stone Fox Capital believes that the filing delay is indicative of larger issues related to the company’s lack of organic growth.
“While a 10-K delay is normally alarming, this filing should just further highlight the size and scale of the deals in relation to the prior company, causing investors to really question the organic growth story,” states the 5-star investor.
Stone Fox explains that much of SOUN’s revenue growth was driven by its acquisitions. The investor notes that when the company bought Amelia – a company with a $60 million run rate – SOUN’s revenue estimates for 2025 only increased by a similar amount.
Still, with a cash balance of $198 million at the end of 2024, Stone Fox does acknowledge that SOUN has an ample amount of funds on hand to continue working to take advantage of its $1.2 billion subscription and bookings backlog.
That being said, the investor is looking for evidence that the company can succeed in executing on these potential sources of revenue.
“The key investor takeaway is that investors should avoid SoundHound AI trading at a rich price reserved for massive organic growth,” concludes Stone Fox Capital. “The 10-K delay is another red flag on top of the growth issue.”
Stone Fox Capital is therefore rating SOUN a Sell. (To watch Stone Fox Capital’s track record, click here)
Wall Street, on the other hand, remains positive about SOUN. With 3 Buy and 2 Hold ratings, SOUN holds a Moderate Buy consensus rating. Its 12-month average price target of $15.80 implies gains of over 60% in the coming year. (See SOUN stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.