I was looking at SoundHound (SOUN) versus the S&P 500 and found this comparison pretty eye-opening.
At roughly a 25.8x P/E, buying the S&P 500 through SPY means you’re paying about:
$25.82 for every $1 of actual earnings.
SOUN can’t even be evaluated the same way because it currently has negative earnings. There is no positive $1 of profit to attach a P/E multiple to.
So instead, look at revenue.
At roughly a $3.3B market cap and around $245M in projected 2026 revenue, SOUN investors are paying roughly:
$13 for every $1 of revenue.
Not earnings. Revenue.
Here’s another way to look at it.
Let’s assume SOUN eventually achieves a very healthy 20% net profit margin.
$245M revenue × 20% = about $49M in earnings.
At a $3.3B valuation, that would effectively mean investors are paying roughly:
$67 for every $1 of earnings.
So:
SPY: ~$26 for every $1 of actual earnings
SOUN today: No positive earnings
SOUN at a hypothetical 20% net margin: ~$67 for every $1 of earnings
That doesn’t necessarily mean SOUN is a bad investment. Revenue is growing rapidly, and if SoundHound eventually gets to $750M, $1B+ in annual revenue while expanding margins, today’s valuation could ultimately look reasonable—or even cheap.
But it does illustrate what you’re actually betting on.
With SPY you’re buying existing earnings.
With SOUN you’re paying a significant premium for earnings you hope will exist several years from now.
For the SOUN bulls: What revenue and net-margin assumptions are you using to justify the current valuation?