We recently published a list of 12 Best Robinhood Stocks to Buy Under $20. In this article, we are going to take a look at where SoundHound AI, Inc. (NASDAQ:SOUN) stands against other best Robinhood stocks to buy under $20.
Stocks priced under $20 have become an attractive option for investors looking to tap into growth without paying the high premiums of blue-chip stocks. These companies often operate in innovative sectors—like quantum computing, autonomous delivery, and clean energy—where technological advancements could lead to significant returns. However, these stocks also come with risks, such as volatility and speculative trading, making it important to separate hype from long-term potential.
Retail trading platforms like Robinhood have made these stocks more accessible, allowing retail investors to drive market movements. In 2023, retail trading accounted for 23% of U.S. equity volumes, according to JPMorgan. This shift has altered the landscape of stock investing, with retail investors now playing a significant role in driving the prices of low-priced stocks. Robinhood, with its commission-free structure and easy-to-use app, has attracted millions of new investors eager to participate in the stock market, often gravitating toward the affordability of stocks under $20.
Low-priced stocks are appealing for a few key reasons. The affordability of these stocks means that investors can diversify their portfolios more easily, mitigating risk by spreading investments across various companies or sectors. For new or retail investors, low-priced stocks can provide an accessible entry point into the market. With a smaller initial investment, it’s easier to dip your toes into stock investing without committing large amounts of capital.
Low-priced stocks often represent companies in the early stages of growth or in industries that are still developing. These stocks may have greater potential for significant price appreciation, particularly if the company experiences a breakthrough. Investors who get in early can sometimes ride the wave of exponential growth. For example, in 2010, Tesla’s IPO price was $17 per share, and for several years, it traded below $20. By 2021, however, the company’s stock price surged to over $1,000 per share, reflecting the company’s transition from an early-stage electric vehicle startup to a global leader in the industry.
However, these stocks also come with risks, such as volatility and speculative trading, making it important to separate hype from long-term potential. According to Saxo Bank, small-cap stocks—often found in the under-$20 price range—tend to be more sensitive to market fluctuations and economic shifts, which can lead to higher volatility and greater price swings.
Our Methodology
For this list, we analyzed stocks that are frequently traded and popular among Robinhood users, focusing on those that are trading under $20. We started by gathering data from multiple trusted financial sources, including popular stock websites and financial news platforms, to identify Robinhood stocks under $20 that are consistently favored by retail investors. Next, we cross-referenced these stocks with Insider Monkey’s Q3 2024 hedge fund database to identify which companies had significant institutional backing. The stocks were then ranked according to the number of hedge fund investors holding positions in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A software engineer focused on a computer screen, writing code to create a conversational assistant.
SoundHound AI, Inc. (NASDAQ:SOUN)
Number of Hedge Fund Holders: 11
SoundHound AI, Inc. (NASDAQ:SOUN) specializes in conversational intelligence, offering cutting-edge voice AI solutions that enable businesses to create natural, human-like interactions with their customers. Their technology powers a wide range of applications, allowing users to engage seamlessly with devices like mobile phones, cars, TVs, and IoT products.
SoundHound AI, Inc. (NASDAQ:SOUN) unveiled its first-ever in-vehicle voice commerce platform at CES 2025, allowing drivers and passengers to order food directly from their car’s infotainment system. The platform integrates with national restaurant chains and enables seamless payments and navigation to pick-up locations, all hands-free. This innovation positions the company as a leader in voice AI for automotive applications and could open new revenue streams.
SoundHound AI, Inc. (NASDAQ:SOUN) reported a record-breaking third-quarter revenue of $25.1 million, marking an 89% year-over-year increase. The company also showed improved customer concentration, with only 12% of revenue coming from its largest customer, a significant drop from 72% last year. Despite the growth, the company posted a GAAP net loss of $21.8 million and a non-GAAP net loss of $15.0 million. Operating expenses grew significantly, with GAAP operating loss expanding by 132% to $33.8 million. SoundHound AI, Inc. (NASDAQ:SOUN) ended the quarter with $136 million in cash, reflecting solid liquidity.
On January 13, 2025, Scott Buck of HC Wainwright & Co. reiterated a Strong Buy rating for SoundHound AI, Inc. (NASDAQ:SOUN), setting a price target of $26, which implies a potential upside of 137.12% from its current price.
Overall, SOUN ranks 9th on our list of best Robinhood stocks to buy under $20. While we acknowledge the potential for SOUN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SOUN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.