Cerence today
As of 11:09 AM Eastern
- 52-week range
- $2.34
▼
$27.50
- Price target
- $8.16
AI-assisted producer shares Serence NASDAQ: CRNC After 2025 there is an upward explosion to begin with The company announced an expanded partnership with NVIDIA NASDAQ: NVDA. Shares rose nearly 144% in a day after the announcement. After that one-day rally, shares have fallen nearly 31% through the close on January 15. So, what should investors do about it? Tech company With a market capitalization of less than $600 million?
It specifically competes with one of the most talked about companies involved A.I– voice support, SoundHound AI NASDAQ: SOUN. SoundHound is valued at about nine times that of Cerence, although it generated less than half of Cerence’s revenue last quarter. This indicates that there is a potential opportunity in Serens stock. I will break down the latest news surrounding Serens and give my opinion on the merits of investing in this company at this time.
Overview of Serens’ business
Cerence makes AI voice assistants for the automotive industry, allowing one to interact with one’s vehicle. Cerence focuses exclusively on the vehicle market. This is a clear difference from SoundHound, which targets many markets, automotive being just one of them. This difference in the size of their target markets has a lot to do with the difference in the valuations of these firms.
Cerence has strong forays into voice assistant technology. The company estimates that more than 500 million cars contain its technology. What’s more, it estimates that 52% of all new cars in the fiscal year ending September 30, 2024 will have its technology. The company’s clients include many major car companies around the world. Major players in the United States, China, Japan and Europe form its customer base.
The company’s trailing-12-month revenue and margins hit June 2023 lows. These figures are now slightly below the peaks reached at the end of 2021. The company is currently in profit for the last 12 months. A systematic basis. However, its revenues and profits fluctuate significantly on a quarter-to-quarter basis. The previous quarter saw negative profit and revenue growth of 32%.
Analyzing the latest news around
To get straight to the point, it doesn’t make much sense that Serens shares have skyrocketed 144% since its NVIDIA announcement. Don’t get me wrong, this is definitely a positive for the company. Expanded collaboration with NVIDIA strengthens the company’s Cerence Automotive Large Language Model (CALLM) product. This helps the company maintain its place as one of the leaders in the space.
Cerence stock forecast today
$8.16
-38.30% declinecatch up
Based on 8 analyst ratings
| High forecast | $23.00 |
|---|---|
| Average forecast | $8.16 |
| Less predictable | $3.00 |
However, when referring to collaboration, the operative word is “detailed.” Partnerships are nothing new. Serens has been working with NVIDIA ever since At least 2022. In particular, on the CALLM product, the partnership with NVIDIA was announced earlier At the end of 2023. Thus the rally was likely due to speculation. It does not memorably change the fundamental principles of the firm. For a small firm like Serens, the mere mention of NVIDIA gets people very excited.
Gasoline was probably also poured on the fire of this rally in the form of a little squeeze. The stock had high short interest on Jan. 3 of 17%. The early rally likely led to short-covering, sending shares even higher. Notably, short interest remains at 17%, indicating that the bears are not expanding on their position.
To me, it would have been more logical to see Serence increase significantly on an announcement made only a day before the NVIDIA announcement. On January 2, the company announced a deal Develop next-generation in-car experiences For Jaguar Land Rover. This means the company is actually gaining a new customer, potentially representing a long-term source of revenue. However, shares rose just 1% on the day.
Final thoughts and outlook on Serence
Overall, Serens still has something important to prove. The company still needs to find a way to achieve consistent revenue growth over the long term. It will need to do this largely through its CALLM product, which represents a significant technological advance. It is important to continue to monitor CALLM product adoption going forward. It will also be important to see if the company can charge significantly more for the product due to its increased capacity.
Hopefully, the company will release detailed preliminary data on the product’s success in its February earnings report. Serens remains a name to watch as its next-generation AI-enabled solutions remain in the early stages of adoption. The success of its CALLM product could result in greater overall success for the stock over time.
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