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SoundHound AI Slides Amid Nvidia’s Strategic Pullback

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
Updated 2/19/2025, 5:21 pm ET 2/19/2025, 5:21 pm ET | 6 min 6 min read
SoundHound AI Slides Amid Nvidia’s Strategic Pullback Thumbnail

SoundHound AI Inc.’s stock is feeling pressure, trading down by -3.32 percent following a report highlighting waning investor confidence in the company’s scalability and AI integration strategy. On Wednesday, SoundHound AI Inc.’s stocks have been trading down by -3.32 percent.

Latest Impactful Developments

  • Shares of SoundHound AI tumbled as market opened reflecting Nvidia’s decision to divest its stakes in this AI firm. The move caught investors off guard.

Candlestick Chart

Live Update At 17:20:51 EST: On Wednesday, February 19, 2025 SoundHound AI Inc. stock [NASDAQ: SOUN] is trending down by -3.32%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • Nvidia’s exit from SoundHound AI, Nano-X Imaging, and Serve Robotics results in significant drops in stock prices for these companies, notably 23% for SoundHound.

  • Recent reports confirm Nvidia’s divestment from various holdings, including SoundHound AI, highlighting its refined focus on core ventures such as Arm Holdings.

  • The strategic repositioning of Nvidia, which involved selling its SoundHound stakes, resulted in a 30% decrease in SoundHound’s shares, stirring caution among traders.

  • Market reaction to Nvidia’s filing indicated quick sell-offs, with SoundHound AI seeing substantial pre-market losses right after the announcement.

SoundHound AI’s Financial Metrics and Implications

When considering the potential for quick gains in trading, it’s essential to maintain a level-headed approach amidst the hype. Many traders get caught up in the excitement of a rising stock or the latest market buzz, leading them to make impulsive decisions. As millionaire penny stock trader and teacher Tim Sykes, says, “There is always another play around the corner; don’t chase just because you feel FOMO.” This sage advice reminds traders to remain patient and strategic rather than succumbing to the fear of missing out, which can often lead to costly mistakes.

In recent weeks, SoundHound AI has faced substantial market turbulence. From Feb 12, 2025, to Feb 19, 2025, the stock price trajectory exhibited drastic changes, reflecting not only corrective forces after Nvidia’s exit but also deeper concerns regarding the fiscal health of this AI player.

The company’s financial metrics illustrate a challenging scenario. Despite a gross margin of 60.7%, the negative ebitdad and an unfavorable return on assets question its profitability. With SoundHound’s ebitmargin spanning a staggering -162.5%, translated inefficiencies cast shadows on operational management. Yet, the enterprise value extending to over $4.13B echoes its investing appeal.

In their earnings repertoire, SoundHound AI reported significant operating revenues but bore high operating expenses. Revenues amounted to $25.09M while sustaining expenses of $57.58M. Our analysis reveals a net loss of $21.75M, accentuating major downsides in cost versus revenue dynamics.

SoundHound’s revenue per share currently floats around $0.136, painting a not-so-rosy landscape of earnings. Moreover, the shadows of debt loom large with $41.93M of long-term obligations and ongoing cash flow predicaments showing negative indicators post CapEx deductions. Its financial strength ratios, such as a current ratio of 2.6, offer some cushion, yet this reflects the necessity for improved cash management strategies.

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The ripples of Nvidia’s decision have undoubtedly sparked investor apprehension. With fluctuating early-day trades fluctuating mildly between $11.07 and $11.25, greater indications of market narratives influencing trader sentiments are observed.

What Comes Next for SoundHound?

In light of recent events, many are left contemplating the future course for SoundHound AI. This AI company’s market perception seems marred by its abrupt disengagement with long-time partner Nvidia, a powerful tech behemoth known for its influential gravitas in the technology sector.

Market participants now weigh external factors, seeking clarity on SoundHound’s standalone strategies. On one hand, Nvidia’s departure delineates the necessity for SoundHound to establish new collaborations to sustain its technological edge. On the other, re-examining its cost structures and enhancing innovation-driven outcomes could seize confidence from investors.

The market, driven by recent fluctuations, appears torn between opportunities for recovery and overextended valuations. Ownership apprehensions run wild given the recent decline, albeit parallel indicators in market capitalizations provide contrasting views to investors eyeing long-term gains.

SoundHound faces the pivotal task of reassuring stakeholders by clarifying its roadmap post Nvidia. With an evolving AI marketplace, capturing fresh talent and strengthening technological advances remain vital for rekindling investor interest.

Concluding Thoughts: Navigating the Turning Tide

The dynamic waves of February 2025 have borne severe challenges for SoundHound AI. The company stands on an inflection point—between potential vulnerabilities of a singular path and forcing innovation to carve out enduring success. Nvidia’s divestiture presents both a setback and a clarion call for resilience.

Restoring trader confidence entails assets utilized strategically and arresting further slide in share price. Understanding market shifts, financial clarity, and addressing operative inefficiencies emerge as essential pillars for SoundHound’s journey onward. As millionaire penny stock trader and teacher Tim Sykes says, “There is always another play around the corner; don’t chase just because you feel FOMO.” This perspective serves as a reminder for prudence in trading strategies, highlighting the importance of patience over hastiness.

While the road seems fraught with ambiguity, solace lies in this firm’s adaptability and possible repositioning. As market watchers await, examining the subsequent reactivity of SoundHound AI shall reveal more about its fate amidst changing times.

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Tim Sykes

Head Writer at TimothySykes.com, Lead Mentor at the Trading Challenge
In his 20-plus years of trading, Tim has made $7.9 million. In his 15-plus years of teaching, Tim’s Trading Challenge has produced over 30 millionaire students. His philosophy emphasizes small gains and cutting losses quickly.
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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”