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AudioEye, Inc. (NASDAQ:AEYE) Not Doing Enough For Some Investors As Its Shares Slump 25%

Simply Wall St · 5d ago

To the annoyance of some shareholders, AudioEye, Inc. (NASDAQ:AEYE) shares are down a considerable 25% in the last month, which continues a horrid run for the company. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 37% in that time.

Following the heavy fall in price, AudioEye may be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 3.1x, since almost half of all companies in the Software industry in the United States have P/S ratios greater than 4.8x and even P/S higher than 10x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

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View our latest analysis for AudioEye

ps-multiple-vs-industry
NasdaqCM:AEYE Price to Sales Ratio vs Industry January 7th 2026

What Does AudioEye's P/S Mean For Shareholders?

Recent times haven't been great for AudioEye as its revenue has been rising slower than most other companies. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

Want the full picture on analyst estimates for the company? Then our free report on AudioEye will help you uncover what's on the horizon.

What Are Revenue Growth Metrics Telling Us About The Low P/S?

There's an inherent assumption that a company should underperform the industry for P/S ratios like AudioEye's to be considered reasonable.

If we review the last year of revenue growth, the company posted a terrific increase of 19%. The strong recent performance means it was also able to grow revenue by 38% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 10% during the coming year according to the five analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 34%, which is noticeably more attractive.

With this information, we can see why AudioEye is trading at a P/S lower than the industry. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

The Final Word

AudioEye's P/S has taken a dip along with its share price. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

As we suspected, our examination of AudioEye's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. The company will need a change of fortune to justify the P/S rising higher in the future.

The company's balance sheet is another key area for risk analysis. Our free balance sheet analysis for AudioEye with six simple checks will allow you to discover any risks that could be an issue.

If these risks are making you reconsider your opinion on AudioEye, explore our interactive list of high quality stocks to get an idea of what else is out there.