SoundHound AI (SOUN), known for its voice software, is in hot water. The company announced a delay in filing its 2024 annual report, which has worried investors. This news pushed the stock down 5.9%, closing at $9.72 yesterday.
Two Big Deals Cause Reporting Delays
The company blamed the delay on the complexities arising from its recent acquisitions of Synq3, Inc. and Amelia Holdings, Inc. According to the company, these deals caused tricky accounting issues, making it harder to finish the report on time. However, SoundHound said that it expects to submit the report by March 18, 2025, using a 15-day extension allowed by SEC rules.
Both of these acquisitions play a key role in SoundHound’s growth strategy. SOUN acquired Synq3, Inc. for about $25 million in the first quarter of 2024, strengthening its position in the restaurant voice AI sector. In August 2024, the company also bought Amelia Holdings, an enterprise AI software firm, for $80 million. These acquisitions have broadened SOUN’s reach in the voice and conversational AI markets.
Internal Issues Add to SOUN’s Worries
The delayed filing is not the only problem. SoundHound also admitted to “material weaknesses” in its internal controls over financial reporting. This means there are gaps in how the company handles its financial data.
While SoundHound said it is working to fix these issues, it did not give many details about how or when the problems will be solved. Such control problems can shake investor trust as they raise concerns about the accuracy of the company’s financial reports.
Strong Q4 Results Offer a Bright Spot
Despite these issues, SoundHound recently posted solid fourth-quarter results on February 27. The company reported revenues of $34.5 million, up 101% year-over-year. Meanwhile, earnings per share came in at -$0.05, which beat analysts’ consensus estimate of -$0.10 per share.
However, the company’s full-year net loss climbed to $351.1 million, more than three times the loss from the previous year. This rising loss adds pressure as SoundHound works to fix its reporting problems.
To regain trust, the company must resolve these issues quickly and keep up with clear, timely reporting.
Is SoundHound Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SOUN stock based on three Buys and two Holds assigned in the past three months, as indicated by the graphic below. The average SOUN price target of $15.80 per share implies 62.64% upside potential.
