The Once-Mercurial Veritone Plummets After Q3 Miss, Stock Downgrade

Veritone Inc (NASDAQ: VERI) shares are sold off after it reported fiscal third-quarter results that missed expectations. Shares of the cloud-based artificial intelligence company have been highly volatile since its listing on May 12.

The Analyst

B Riley/FBR analyst Sameet Sinha issued this post-earnings review note.

The Rating

B Riley/FBR downgraded Veritone from Hold to Sell and lowered the price target from $18 to $15.

The Thesis

The earnings miss and a mixed qualitative outlook is the culprit that dragged Veritone stock lower, Sinha said.

The analyst attributed his downgrade to the absence of meaningful traction in the focus SaaS business, the likelihood of push-out of verticals from the second half of 2017 to the second half of 2018 and the valuation of the stock not being supported by recent execution.

See Also: Acacia Research Owns More In Veritone Than Its Own Market Cap

The bottom-line miss was attributed to lower-than-expected revenue at both business units and higher stock-based compensation. The firm lowered its revenue estimates for 2017, 2018 and 2019 and widened its loss per share estimate for 2017 but narrowed its loss per share estimates for 2018 and 2019.

The Price Action

Veritone shares closed its debut session in the red, clocking a loss of about 13 percent at $13.07 compared to its offer price of $15. Subsequently, the stock trended broadly lower until it hit a low of $7.87 on Aug. 18.

Prodded by a Barron's article that sang the virtues of artificial intelligence and Veritone's prowess in the field, the stock ran up to a high of $65.91 on Sept. 26. However, since then the stock has come off this level.