Shares of voice AI software company SoundHound AI (SOUN) are up in today’s trading as investors await its Q3 earnings results on November 12 after the market closes. Analysts are expecting earnings per share to come in at -$0.07 on revenue of $23.02 million. This equates to 22.2% and 73.5% year-over-year increases, respectively, according to TipRanks’ data.
Ideally, earnings per share should grow faster than revenue as this demonstrates a high degree of operating and financial leverage in the business. Unfortunately, it doesn’t seem like the company has reached this point yet, as it appears to be most focused on growing its top line.
It’s also worth noting that SOUN has a choppy record when it comes to beating earnings estimates, as it has only done so three times during the past eight quarters.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see that options traders are expecting a 24.31% move from SOUN stock in either direction right after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement.
It is worth noting that SOUN’s after-earnings price moves in the past 10 quarters have never exceeded this expected 24.31% move, which suggests that the options are currently overvalued at the moment.
Is SOUN Stock a Good Investment?
Turning to Wall Street, analysts have a Strong Buy consensus rating on SOUN stock based on four Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 280% rally in its share price over the past year, the average SOUN price target of $7.70 per share implies 1.7% upside potential.
