SoundThinking, Inc.(SSTI.US) stock continues to face strong selling pressure.

After the stock plunged 25% on Friday following disappointing financial results, it fell another 10% on Monday to $5.58 . This brought the stock's losses to nearly 33% in just two trading sessions , as market sentiment quickly turned cautious about the growth prospects of the AI-powered security and safety solutions company.

This decline is not just related to disappointing quarterly results, but reflects a simultaneous reduction in revenue forecasts, a decline in profitability, and a deterioration in future prospects .

Results below expectations and a sharp reduction in guidance.

SoundThinking's revenue in the second quarter fell 8% year-over-year to $23.9 million , while its net loss widened by about 55% to $4.8 million , or $0.37 per share, exceeding analysts' expectations of a loss of about 46%.

The company attributed the decline in revenues mainly to some customers not renewing their contracts and delays in renewal processes.

More importantly, the company lowered its 2026 revenue guidance from $109-111 million to $99-100 million , a decrease of nearly 9%. It also sharply reduced its adjusted EBITDA margin forecast from 16%-18% to just 8%-9% .

For a small, growth-oriented company, this means that the pressures are not limited to weak short-term revenues, but also extend to profitability and the efficiency of the growth model .

Analysts reassess the stock

Following the release of the results, Wall Street became more cautious towards SoundThinking, Inc.(SSTI.US) .

The six analysts currently covering the stock expect revenue of about $99.4 million in 2026, which is roughly the same as the past 12 months, while their loss forecast for the stock has risen to $1.12 .

Prior to the release of the latest results, analysts had been expecting revenues of $109.2 million and a loss per share of just $0.68 in 2026.

In other words, the market not only lowered its revenue forecasts, but also significantly raised its loss estimates.

The average target price also declined by 22% to $10.17 . Current target prices range from $16 in the most optimistic estimate to $6 in the most pessimistic, reflecting significant uncertainty about the company's growth prospects.

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The biggest problem: Growth in the AI sector does not necessarily mean growth in SSTI.

SoundThinking, Inc.(SSTI.US) provides AI-powered solutions for public safety and commercial security, including firearm and weapon detection systems and investigation management. The sector itself still possesses significant long-term growth potential, and the company's management emphasizes its opportunities in both public safety and commercial security.

But the latest forecasts raise a more realistic question:

If the entire sector is growing, but SoundThinking, Inc.(SSTI.US) cannot maintain the pace of growth, can the AI story alone support the stock's valuation?

Analysts expect the company's revenue to grow by only 2.9% in 2026, which is significantly lower than the historical growth rate of around 12% over the past five years, and also clearly lower than the expected annual growth rate for the software sector, which is around 17% .

This means that SoundThinking may face a problem that goes beyond just weak results in one quarter, namely that the company continues to grow at a slower pace than the sector as a whole .

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After the stock reached $5.58, what awaits the market?

SSTI shares are currently trading at $5.58 , down about 10% from Friday's close of $6.20. As the sharp sell-off continues, the market appears to be rapidly lowering its expectations for the company's future performance.

However, Wall Street still doesn't view the stock entirely negatively. Analysts' average price target remains significantly higher than the current price, with the highest target reaching $16 , meaning there could theoretically be considerable room for a rebound if the company manages to return to growth.

But the market is not currently looking for more promises associated with artificial intelligence; rather, it wants to see tangible improvements in business performance .

• Will customer contract renewal rates recover?
• Can revenues return to growth?
• Can the EBITDA margin stop declining?
• Will the company be able to prove that the current poor performance is temporary?

If the answer is yes, the current sharp decline could provide a basis for a stock rebound. However, if contract renewal issues persist, revenue remains stagnant, or losses continue to mount, the pessimistic $6 price target could be just the beginning of further valuation reductions .

In summary, SoundThinking remains a player in the AI-powered security sector, which has significant long-term growth potential. However, the sharp decline in its stock over two trading sessions suggests that the market has shifted its focus from the company's "bet on AI security growth" to its ability to deliver tangible results . For SSTI, the key factor going forward will not be the appeal of AI, but rather the company's ability to demonstrate its capacity for a return to growth.

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Attention Investors : Shares of small-cap companies are characterized by high levels of volatility and risk, and may experience sharp price movements in both directions over short periods. Therefore, investors should exercise caution, conduct thorough due diligence before making any investment decisions, and consider whether such investments align with their risk tolerance.