Newsflash: SoundHound AI, Inc. (NASDAQ:SOUN) Analysts Have Been Trimming Their Revenue Forecasts

The analysts covering SoundHound AI, Inc. (NASDAQ:SOUN) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Bidders are definitely seeing a different story, with the stock price of US$4.00 reflecting a 42% rise in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the downgrade, the most recent consensus for SoundHound AI from its three analysts is for revenues of US$46m in 2023 which, if met, would be a substantial 72% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 35% to US$0.35. Yet before this consensus update, the analysts had been forecasting revenues of US$59m and losses of US$0.42 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.

See our latest analysis for SoundHound AI

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting SoundHound AI's growth to accelerate, with the forecast 54% annualised growth to the end of 2023 ranking favourably alongside historical growth of 34% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect SoundHound AI to grow faster than the wider industry.

The Bottom Line

While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on SoundHound AI after today.

There might be good reason for analyst bearishness towards SoundHound AI, like recent substantial insider selling. Learn more, and discover the 2 other concerns we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.