$3AI stock: The May 2023 advertisement has not changed. The introduction of the recent pitch refers to the stock as a $6 wonder stock and states, Although the $3 AI stock is no longer trading at $3, it is not too late. According to Ross, there is a significant amount of profit potential left in this $3 AI Stock.

In the newsletter world, this is referred to as a front end service, intended to fill the top end of the funnel with new customers and their credit card numbers so you can try to pitch them on value-added services and upgrades.

While free subscribers are valuable for use as sales prospects, people who have demonstrated a willingness to pay something, even a trivial amount such as five bucks, are much valuable. This is a pitch for a trading service of some sort from Ross Givens, and he calls it the Live Action War Room. It is cheap just $5.

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Why to Consider Ross Givens $3 AI Wonder Stock in 2024?

Perhaps, considering how much money they have invested in AI over the previous ten years, the industry titans such as Alphabet, Microsoft, and Amazon will emerge on top in the long run. Nothing is certain, and success is not contingent on being the one big winner, even when you are starting out small.

Thinkolator reports that the stock that Givens is promoting is called SoundHound AI (SOUN). The firm went public in a 2022 SPAC merger and, similar to several other SPACs, had a sharp decline in value as investors began to examine the company’s real financials.

At the end of 2022, SOUN’s share price had dropped to about $1, signifying a 90% loss for those who had the misfortune of investing in that SPAC towards the end of 2021 and sticking with it through the business combination.

Investor optimism was rekindled by AI mania and a few new partnership deals, which temporarily elevated the share price back above $4. The company was laying off 40% of its workforce and raising an additional $25 million in preferred shares and convertible debt.

Just a month or two before ChatGPT and NVIDIA ignited the flame for the AI hype, insiders purchased some of those sales of preferred shares as part of their rescue recapitalization of the company.

Searching through their SEC filings, no insider has ever purchased common stock at SOUN on the open market. Insiders have not been price-sensitive, having sold at both $2 and $6 over the previous six months or so.

Although SOUN was hoping for $220+ million, they ended up with just under $65 million from the SPAC deal in 2022. Almost every penny of that money came from the $113 million in PIPE private funding that was provided in conjunction with the merger, some of which was used to allow SOUN’s private owners to cash out a portion of their ownership.

At the end of that year, SOUN had less than $10 million in cash, so it is probable that they needed to raise money just to fund their severance deals with that large portion of the employee base. This is why the convertible preferred PIPE financing was required. 96% of the SPAC shareholders redeemed their shares for cash, which turned out to be a wise move.

With a $100 million loan from Atlas Credit Partners announced in mid-April 2023, extending their debt financing through 2027, things have gotten a little accurate on that front over the past year or so. This will provide them time to figure out how to build a profitable business and work through their current cash burn.

The terms of the loan were, as you might expect, onerous for the borrower; they were required to pay fees, hold some of their interest payments in escrow, and use some of the proceeds to pay back an existing loan.

They managed to accumulate enough cash to last until 2023, and they are in a respectable amount of money on their balance sheet at the end of the year, with almost 100 million dollars in cash.

They had losses of approximately $83 million the previous year, but they issued a substantial amount of shares for cash to absorb operating costs, and used stock-based compensation, accounting for about fifty percent of their revenue. Since they have seen significant layoffs, last year’s cash burn was a tad slower.

When we initial covered this teaser ad almost a year ago, SoundHound AI shares were trading at $4, riding the wave of interest in anything with the word AI in its name. They were trading at $1 when it appeared that the company might fail soon, in January 2023, but since then, they have fluctuated significantly, seeing prices of both $1.50 and $8 in the last six months or so.

The market cap of the firm is currently at $4.60, or approximately $1.4 billion. Since the original SPAC deal’s implied valuation was roughly $2 billion, the actual value is close to that amount, even though part of the reason for this is that the number of shares has increased by nearly 50% since the SPAC merger.

Although the business does not appear to be scalable just yet, they are still in growth mode, and things do appear to be somewhat improved than they were a year ago.  It is obvious that there is still a long way to go because both SG&A and R&D should be subtracted from gross profit in order to obtain an actual operating profit.

Over the past year, the gross profit curve has shifted to the positive side, and their operational costs have decreased. They may be able to develop into a sustainable business, but they are not there yet. They keep announcing deals for consumers to use their AI voice processing software, which is for drive-through restaurant chains and automakers.

Perhaps they can rekindle hope before depleting their current balance sheet. As of right now, their valuation is approximately 23 times that of their 2023 revenue, or roughly 20 times the roughly $70 million in revenue that analysts predict they will report for 2024.

They have provided beginning guidance for 2025 that calls for further than $100 million in revenue, which aligns with analyst estimates now in place. Analysts have even projected a positive EBITDA figure for that year on average. The goal is for businesses to become self-sustaining and stop losing money in about 18 months.

They have a chance because they are, at least, increasing their revenue. Although they have not experienced the exponential growth in sales that they had anticipated in 2021, they have grown revenue at a rate of about fifty percent on annual basis.

Before going public in the SPAC deal, SoundHound was considered one of the venture industry’s unicorns, though that term does not apply to companies that received venture funding between 2016 and 2021.

Prize capitalists used to call a company that reached a billion-dollar valuation before going public a unicorn, but as venture funding became plentiful and competitive, businesses began to remain private for much longer, causing unicorns about as common as squirrels.

We recall hearing rumors that their devices outperformed Shazam, the known music identification service that is now controlled by Apple, and that their Houndify service was effective as an assistant than Alexa. Those rumors have since faded and the market has changed.

The presentation of the new Dynamic Interaction product sounds outstanding and it appears that SoundHound is now putting a lot of its ambition on the quick-service restaurant and car segments.

There are others working on this, such as businesses that have agreements with automakers akin to Apple CarPlay or Amazon’s Alexa, albeit CarPlay and its Android counterpart are the simpler ones. The Echo Auto device from Amazon is unimpressive and has not gained much traction. It seems that in order to attain any mainstream usage, you need to be built into the smartphone or the car itself.

If automobile manufacturers continue to improve their voice features, SoundHound might be able to compete with the major players.

Distribution could be difficult even if SoundHound is superior to the current options, assuming the Department of Justice will permit large tech companies to acquire any company these days, which is unclear in light of Amazon’s botched attempt to rescue a small company, iRobot, through acquisition.

Distributing SoundHound could pose a risk to consumer privacy. That is accurate; they claim to have over one hundred restaurant patrons, and their revenue has increased over the past year. They have made progress in acquiring restaurants with recent deals, such as the acquisition of SYNQ3.

SoundHound has drawn the interest of several analysts and investors during the past year, but almost every one of those analysts are employed by investment banks that were either involved in the initial SPAC deal or are now assisting SOUN in raising capital.

They keep bringing on new clients and promoting these deals, such as their intention to use AI to process drive-thru at White Castle and a number of other fast food voice AI agreements collaborating with both Olo and Oracle restaurant POS systems, in addition to Toast, in addition to agreements with numerous automobile manufacturers to integrate voice assistants into upcoming models.

Insiders have been consistent sellers of shares for over a year, and they have been willing to sell at $1 in addition to $5. This is not a bad thing because newly public growth stocks pay their employees with shares, and those employees are net sellers because shares cannot be used to pay for a house, a boat, or college expenses.

On average, stocks with insider selling do not perform much different from stocks without insider selling. There is at least a single positive missing: there is not a true ownership culture or staff buy-in, and no executives or board members are using advantage of the low share price to acquire significant positions.

The stock saw the significant increase in mid-February of this year and that was brought on by the revelation that NVIDIA owns some shares of SOUN, not their earnings update, which was released a few weeks later. For the avoidance of doubt, NVIDIA has owned a little portion of SoundHound since it was a venture investment several years ago; they purchased the shares six or seven years prior.

Midway through February, NVIDIA disclosed that it had a few minuscule venture investments, which sparked a wave of interest. None of those were novel; NVIDIA was not before obligated to disclose those periodic 13F reports since it did not have sufficient value in outside investments. This changed with the IPO of ARM Holdings (ARM), which is by far NVIDIA’s largest foreign investment.

Their entire investment portfolio in publicly traded stocks was now above the $100 million threshold, necessitating disclosure. Their interest in SOUN became publicly known, joining their much significant known ownership of ARM and Recursion Pharma, in addition to a few other small businesses.

In the automotive industry, SOUN uses NVIDIA’s DRIVE system for its voice assistants. This partnership is restricted, and both companies operate small businesses at this time. The story may alter when SoundHound releases their upcoming quarterly financial report on May 9.

Conclusion: $3 AI Stock

What do you think now?

Over the next few years, will SoundHound transform from a cash-guzzling SPAC disaster to a profitable software company? Are their chances strong enough to gamble money on them at a valuation roughly 20 times their projected revenue in 2023?

Tell us in the comments section below about $3 AI stock.

FAQs: $3 AI Stock

What is the $3 AI Stock and why is it significant?

The $3 AI Stock refers to a specific stock priced at three dollars that is associated with the growing field of artificial intelligence. This sector has seen massive growth potential, in particular with advancements in AI technology and increasing interest from investors. Numerous analysts believe that stocks in the AI market could outperform traditional stocks, they are appealing for stock trading.

Who is Ross Givens and what is his connection to the $3 AI Stock?

Ross Givens is a financial analyst known for his insights into emerging stocks, particularly in the AI sector. He has teased about a specific AI wonder stock that could yield high returns by 2024. His suggestions often focus on stocks that are undervalued, such as the $3 AI wonder stock, which he believes has the ability to appreciate in price.

What are the growth potential and risks involved with investing in AI stocks?

Investing in AI stocks, the $3 AI Stock, can offer substantial growth potential due to the rapid advancements in AI technology. There are risks involved, including market volatility and the unpredictability of the AI market. Investors should conduct thorough research and consider the valuation of the company before diving into stock trading.

How does the $3 AI Stock compare to giants such as NVIDIA and Microsoft?

While companies like NVIDIA and Microsoft are leaders in the AI technology space, the $3 AI Stock represents a speculative investment opportunity. These established companies have high market caps and stable stock prices, while the $3 AI Stock may offer a chance for higher returns at a lower entry point. They come with higher risks and less historical performance data.