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Why Veritone Stock Fell 23.8% in July

By Keith Noonan – Aug 10, 2020 at 8:49AM

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The AI company's share price lost ground last month, but it's still up more than 400% in 2020.

What happened

Shares of Veritone (VERI 2.88%) slumped 23.8% in July, according to data from S&P Global Market Intelligence. The loss appears to have had more to do with investors cooling on the stock after months of stellar gains than any business-specific news. 

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^SPX data by YCharts

Veritone's share price lost ground early in the month, but it posted big gains after the company published a press release updating its second-quarter guidance on July 9. However, improved targets for the second quarter weren't enough to extend the artificial intelligence (AI) company's tremendous months-long winning streak through July. 

A network of lights and lines forming an image of a person and text reading 'AI.'

Image source: Getty Images.

So what

The company increased its sales target for the second quarter to between $13.1 million and $13.3 million, up from its previous target for sales between $11.8 million and $12.2 million. The company expects its non-GAAP (adjusted) net loss for the period to be between $5.8 million and $6 million, and it anticipates that its adjusted loss will continue declining in sequential quarters.

For context, the business's adjusted net loss in the first quarter was $6.7 million. Sales for Q1 came in at $11.9 million, down 4.4% sequentially and 1.8% year over year. Software-as-a-service (SaaS) revenue for the company's aiWARE platform increased 13% year over year to $3.1 million. Advertising sales for the period came in at $6 million, down 7.7% sequentially but up roughly 5.2% year over year.

Now what

Veritone stock has bounced back in August's trading. The company's share price is up roughly 14.7% in the month so far. 

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^SPX data by YCharts

Veritone has a market capitalization of roughly $350 million and is valued at roughly 6.6 times this year's expected sales. The company's small size and initiatives in the fast-growing AI industry do create explosive potential for the stock and help explain its stellar run in 2020, but the company's artificial intelligence business currently accounts for well under half of sales and isn't growing terribly fast. 

Investors should get a more detailed update on the business when Veritone publishes Q2 results and hosts an earnings call after the market closes on Aug. 10. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Veritone, Inc. Stock Quote
Veritone, Inc.
VERI
$7.49 (2.88%) $0.21

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