3 Things About SoundHound AI That Smart Investors Know

SoundHound AI (NASDAQ: SOUN) disappointed a lot of investors after it went public by merging with a special purpose acquisition company (SPAC) in April 2022. The audio and speech recognition specialist started trading at $8.72 per share on its first day as a combined company, but it's now worth about $2 per share. Like many other SPAC-backed businesses, SoundHound lost its luster as rising interest rates cast a harsh light on its slowing sales growth, steep losses, and high valuation.

SoundHound's revenue rose 47% to $31 million in 2022, and it expects sales to jump 39%-61% to $43 million to $50 million in 2023. Yet it had previously told investors it could generate $98 million in revenue in 2023 during its pre-merger presentation. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss also widened from $54 million in 2021 to $73 million in 2022 -- but the company insists its adjusted EBITDA margin will turn positive by the fourth quarter of 2023. With an enterprise value of nearly $500 million, SoundHound still trades at nearly 11 times this year's sales.