Several analysts are voicing bullish Spotify stock views as the streaming giant continues to prioritize profitability. Photo Credit: Fabio Spano
Is Spotify (NYSE: SPOT) Wall Street’s next darling? Multiple analysts are rallying around SPOT as the company continues to zero in on operational efficiency and profitability.
To this point in September, these bullish Spotify stock positions have come from UBS, Wells Fargo, and Zacks Equity Research. And while today was a mixed bag for the market – with potentially rocky roads ahead, according to some – the optimistic views appear to underscore confidence in the music streaming giant’s current business model.
As highlighted, that model, defined by significant layoffs, multiple podcast cancellations, and a heightened focus on near-term profitability, has taken center stage in 2024. Moreover, the efficiency push has brought with it substantial gains for SPOT, which, at $336.39, is up about 78 percent on the year and close to 114 percent from mid-September of 2023.
Ironically, Spotify’s stock-price ascent has been accompanied by continued market woes (seemingly fueled by a streaming-growth slowdown for their particular catalogs) for the major labels – or the businesses from which Spotify licenses an integral component of its increasingly diversified platform.
In any event, Spotify’s H1 2024 results are a harbinger of success to come – at least according to Wells Fargo, which has booted Disney from its “Signature Picks List” and added Shopify as well as Spotify.
Explaining the latter choice, Wells Fargo cited, in part, “rapid changes to its profitability outlook” and “relative insulation from economic downturns.”
Next, UBS has deemed SPOT its top media stock of 2024, elaborating that it believes “the recovery of the music industry’s monetization remains in the early days.” Likewise contributing to UBS’ Spotify stock selection are expectations of “sustained subscriber growth (skewing more to developing markets)” as well as “better monetization of the existing subscriber base” via price increases and new tiers.
Not to be left out, Zacks has formally chosen Spotify stock as its “Bull of the Day” for many of the same reasons described above.
Though it perhaps goes without saying, not every analyst is on the same page with regard to SPOT.
Seeking Alpha’s Gary Alexander just recently explored in detail his reasons for downgrading Spotify stock’s rating, including “slowing user growth,” “lumpy user trends,” and “huge content costs,” to name a few.
Furthermore, this is hardly the first time SPOT has found itself, generally speaking, on analysts’ good side. Way back in 2021, at the height of the stock’s podcast-fueled valuation hike, some high-profile professionals were settling on target prices well in excess of $400 per share. By mid-2022, however, SPOT was hovering around $100 and would dip into the low-$70s by yearend.
Also worth emphasizing are the decidedly tall investor expectations in place for Spotify – a point that should be kept front of mind when it comes to subscriber and especially profitability results in forthcoming earnings reports.
Concluding on an adjacent note, Spotify in April announced that Saab CFO Christian Luiga would come aboard in the same role sometime during the third quarter. Stockholm-based Saab in June revealed Luiga’s own replacement effective September 9th – meaning Spotify’s next CFO, despite having not yet updated his actively used LinkedIn profile accordingly, appears poised to sign on sooner rather than later.
