Stirling Stock Analysis: Still Time to Buy Veritone?

(Veritone)

Veritone (VERI) rode the artificial-intelligence exuberance up another 35% in late-day trading Tuesday.

Make no mistake, the interest in both Veritone’s AI and its stock is very real, but that doesn’t make it an automatic buy here.

While AI and machine-learning is a favorite space for Stirling Strategic Investor, Veritone’s stock has moved to $46 from $8 mostly on the Aug. 18 mention in Barron’s.

Growth numbers on the surface are huge, but when you starting from only a handful of users and a few million in revenue, they better be sure if you hope to survive.

Since its inception on July 5, recommended stocks by Stirling Strategic Investor have returned 6.62% by Sept. 11 vs. the S&P return of 3.32%.

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VERI has $66 million in cash, but we believe they will do a secondary offering soon to pad their cash position as the company has doubled up spending on marketing along with research and development.

That puts them on pace to burn their existing cash within two years.

We’d focus our entry around the secondary offering or if shares retraced into the $17 to $24 range.

Those unfamiliar with the business, but are noticing the stock, first here’s what the company says it does.

Veritone, Inc. is a leading artificial intelligence company that has developed the Veritone Platform, which unlocks the power of AI-based cognitive computing to transform and analyze unstructured public and private audio and video data for clients in the media, politics, legal and law enforcement industries.

To dig into that, the company has technology that lets it scour audio and video data for results that are useful to its clients.

It uses more than 45 cognitive engines from third parties like Google (GOOGL), IBM (IBM) and Microsoft (MSFT) and “several Veritone developed cognitive engines” to create the platform, it said in its IPO filing.

The company is very big on promoting “cognitive” and AI.

For an example on how that helps customers, take Veritone Legal, which “can render every second and frame of audio and video content searchable for things like faces, phrases, sentiment, and voice identification.”

Veritone also has a more traditional media buying and placement business, but is looking to move more into its AI business.

Read more on our coverage of Veritone’s IPO here.