SoundHound AI CEO Offloads Over $750K in Company Stock

SoundHound AI, Inc. CEO Keyvan Mohajer has recently divested a notable amount of his shares in the company, as indicated by the latest SEC filings. On September 20 and 23, 2024, Mohajer sold a total of 154,185 shares of Class A Common Stock for more than $750,000.

The initial transaction occurred on September 20, when he sold 90,641 shares at a price of $4.8795 each, amounting to approximately $442,282. This sale was necessary to fulfill tax obligations related to the vesting of restricted stock units awarded to him between July 2022 and August 2024.

On September 23, Mohajer sold an additional 63,544 shares at prices between $4.87 and $5.02, with a weighted average of $4.9162 per share, generating around $312,395. This sale was part of a Rule 10b5-1 trading plan Mohajer established in March 2024.

After these transactions, Mohajer’s direct ownership in SoundHound AI has decreased to 2,299,148 shares of Class A Common Stock. It’s important to note that these sales were executed through a prearranged trading plan, designed to help insiders sell shares at predetermined times, thereby mitigating any potential allegations of insider trading.

Investors often monitor insider transactions as they can provide insight into executives’ confidence in a company’s future. However, sales that are planned in advance or related to tax obligations are quite common and do not necessarily reflect a lack of confidence in the business.

SoundHound AI, based in Santa Clara, California, focuses on prepackaged software services and is a key player in the tech market. The company, previously known as Archimedes Tech SPAC Partners Co., has been publicly traded since rebranding in January 2021.

In other developments, SoundHound AI has reported a significant 54% rise in its second-quarter earnings for 2024, reaching $13.5 million. The company has also made strategic acquisitions, including Amelia AI and Allset, aimed at enhancing customer service and developing a voice commerce ecosystem. These initiatives are anticipated to positively influence earnings in the latter half of 2025. Additionally, SoundHound AI’s backlog of subscriptions and bookings has surged to $723 million, doubling year-over-year, indicating robust demand for its services. In partnership with MUSC Health, SoundHound has introduced an AI-powered agent named Emily to improve patient appointment management. H.C. Wainwright has maintained a positive outlook on SoundHound AI, reiterating a Buy rating and expressing confidence in the company’s revenue growth and cost management strategies.

As SoundHound AI navigates this period of insider transactions, investors may benefit from closely examining the company’s financial health and market performance. With a market capitalization of $1.75 billion, SoundHound AI is a mid-sized player in the tech sector and boasts a balance sheet that indicates it holds more cash than debt, a sign of financial stability. This is an important consideration for investors, particularly in light of the CEO’s recent stock sales.

Analysts forecast continued sales growth for SoundHound AI in the current year, with the company already showing a remarkable 53.47% revenue growth over the past twelve months as of Q2 2024. The stock has also seen a commendable return over the last year, with an impressive 168.13% total return price increase. These growth metrics can be appealing for investors seeking companies with expanding revenue streams.

Additionally, it is noteworthy that SoundHound AI’s stock price has been somewhat volatile, which may be a consideration for investors with a lower risk tolerance. The company is currently trading at a high Price/Book multiple of 7.85, indicating a premium valuation compared to its book value. Despite the CEO’s recent share sales, SoundHound AI does not pay dividends, suggesting that investors might primarily be looking at capital gains for their returns. This, combined with the company’s growth prospects and current financial standing, may significantly influence investment decisions.