SoundHound AI (NASDAQ:SOUN) stock closed about 7% lower on Wednesday, April 10. Moreover, it fell over 2% in after-hours trading. This drop followed management’s announcement that it would issue and sell SOUN stock. The company entered into an equity-distribution agreement with multiple banks under which it may sell up to $150 million in stock from time to time.
The sale of stocks is often perceived negatively due to their dilutive effect on existing shareholders.
SoundHound AI is a conversational artificial intelligence (AI) solution provider. Its stock has dropped by over 23% so far in April. Despite this decline, it is still up about 113%, getting a boost from investors’ optimism on AI. Notably, chip giant Nvidia (NASDAQ:NVDA) disclosed a stake in the company in February 2024, further boosting investors’ sentiments.
Analyst Knoblauch Upgrades SOUN Stock
In a separate development, Cantor Fitzgerald analyst Brett Knoblauch upgraded SOUN stock to Hold from Sell. The analyst has a price target of $4.90, implying 8.65% upside potential from current levels. Knoblauch said that the recent decline in SOUN stock has led its valuation to contract. He believes that the risk-reward ratio is equally balanced at the current price levels.
Investors should note that Brett Knoblauch is the most accurate analyst for SOUN stock in a one-year timeframe, according to TipRanks. Copying Knoblauch’s trades on SOUN stock and holding each position for one year could result in 100% of your transactions generating a profit, with an average return of an impressive 145.21% per trade.
What is the Future of SOUN Stock?
Wall Street is cautiously optimistic about SOUN stock. It has four Buy, one Hold, and one Sell recommendations for a Moderate Buy consensus rating. Analysts’ average price target on SOUN stock is $7.15, implying 58.54% upside potential from current levels.
