April 22, 2024
Investors

Spotify Stock Could Be Forming New Base


Spotify Technology

Spotify Technology

SPOT


$0.39



0.21%



60%

IBD Stock Analysis

  • Stock finding support at 21-day average.
  • Shares a few weeks into a possible new base.

Composite Rating

Industry Group Ranking

Emerging Pattern

Pullback

* Not real-time data. All data shown was captured at
1:54PM EST on
12/27/2023.

Spotify Technology (SPOT) is the IBD Stock Of The Day as the music and podcast streaming service focuses on improving its profitability. Meanwhile, Spotify stock could be forming a new base.




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Spotify stock has climbed steadily since the music streamer posted a surprise profit in the third quarter and beat expectations for new subscribers and total listeners in the period.

In afternoon trades on the stock market today, Spotify stock rose 0.2% to close at 190.27. In a bullish sign, the stock has found support at its 21-day exponential moving average. A strong move off that line would offer an early entry for aggressive investors.

More cautious investors might want to wait for Spotify stock to form a proper base, which it appears to be doing.

Spotify Stock Gets Positive Reviews

Last week, Spotify scored a pair of bullish reports from Wall Street analysts.

Pivotal Research Group analyst Jeffrey Wlodarczak upgraded Spotify stock to buy from hold. He also hiked his price target on the stock to 265 from 170.

Spotify’s “renewed focus on financial discipline” was a key factor for the upgrade, Wlodarczak said in a client note. That focus should result in higher medium- and long-term adjusted earnings and free cash flow, he said.

“It appears that Spotify has won the digital audio streaming content war,” Wlodarczak said. From its position of strength, Spotify should be able to raise prices without significant churn, he said.

Elsewhere, Guggenheim Securities analyst Michael Morris reiterated his buy rating on Spotify stock with a price target of 220.

In a client note, Morris said he expects Spotify “to remain diligently focused on efficient operations and a path to stronger profit and free-cash-flow growth.”

Beat-And-Raise Earnings Report

On Oct. 24, the Stockholm-based company said it added 6 million premium subscribers worldwide in the September quarter. Analysts had expected 4.2 million new subscribers. Spotify ended the period with 226 million total paying subscribers.

Plus, Spotify tallied 574 million monthly active users in the third quarter vs. Wall Street’s target of 572 million. Spotify offers an ad-supported service in addition to its commercial-free subscription service. Its monthly active users rose 26% year over year.

The audio entertainment service earned the equivalent of 36 cents a share on sales of $3.65 billion in the third quarter. Spotify reports financial results in euros. Analysts polled by FactSet had predicted Spotify would lose 24 cents a share on sales of $3.52 billion.

Spotify also gave guidance that topped consensus estimates for revenue, subscribers and total listeners.

Spotify stock ranks fifth out of 19 stocks in IBD’s Computer Software-Education and Media industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 80 out of 99.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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