SoundHound AI, listed on NASDAQ under the ticker SOUN, saw its shares close at $7.85, a decline of 5.65%. This downturn follows news of the company’s recent acquisition of LivePerson, a transaction structured as an all-stock deal. Investors are expressing concern over potential shareholder dilution due to this acquisition, and are closely monitoring the company’s ability to meet its omnichannel AI growth objectives. The trading volume for SoundHound AI reached 54.2 million shares, a significant increase of 107% over the three-month average of 26.2 million shares. Since going public in 2022, the company’s stock has appreciated by 5%.
In broader market movements, the S&P 500 decreased by 0.65% to 7,063, while the Nasdaq Composite dropped 0.59% to 24,260. Other software companies in the AI sector also faced challenges, with C3.ai closing at $9.20, down 1.97%, and BigBear.ai finishing at $3.79, falling 1.30%. This reflects a generally cautious sentiment surrounding AI-focused software stocks.
In a strategic move, SoundHound AI has announced the acquisition of LivePerson, specifically its Conversational Cloud, for approximately $250 million, which includes LivePerson’s existing debt. This acquisition is designed to create a formidable presence in the conversational AI sector, catering to 25 of the Fortune 100 companies as well as 12 of the top global banks. Management projects that the joint entity could achieve revenues between $350 million and $400 million by 2027, with the potential for cross-selling strategies to push revenues to as high as $500 million as the two companies integrate. Although the all-equity nature of the deal may dilute current shareholders, SoundHound AI is expected to sustain a debt-free balance sheet.
Looking ahead, the company anticipates a more than doubling of its sales by 2027, which enhances its profile as a potential investment, particularly if it continues its trajectory toward profitability.
On a cautionary note for prospective investors, the Motley Fool Stock Advisor analyst team recently identified ten top stocks for investment consideration, notably omitting SoundHound AI from this selection. Historically, stocks highlighted by Stock Advisor, such as Netflix and Nvidia, have delivered exceptional returns, with the service boasting a total average return of 986%—significantly outperforming the S&P 500’s return of 199%. Investors are encouraged to examine the latest recommendations before making decisions in the current market landscape.
