stock camera
Spotify (New York Stock Exchange: POINT) Share fell more than 2% in premarket trading Thursday, when investment firm Monness, Crespi, Hardt downgraded the audio streaming giant, citing its strong rebound in 2023.
Analyst Brian White Downgraded Spotify (SPOT) Stock to Neutral to buy, noting that there are concerns about “possible collateral damage” from a possible slowdown.
“Spotify is following a favorable long-term trend, improving its platform, tapping into a large digital advertising market, expanding its audio offerings and improving its cost structure; however, competition is fierce, margins are tight and we believe darkest days of this crisis lie ahead,” White wrote in a note to investors.
White added that upcoming price increases in Spotify (SPOT) services could result in “incremental headwinds” for consumers and therefore the company, due in part to its belief of a pending economic recession.
In July, Spotify (SPOT) revealed price increases for its various subscriptions, both in the United States and around the world.
Spotify (SPOT), led by Daniel Ek, is scheduled to report third-quarter results on Oct. 24, and White expects the company to deliver 9% annual growth in sales to €3.32 billion, slightly below Wall Street’s forecast of 3,334 million euros.
White also expects monthly active user growth to increase 26% to 574 million, which he believes will help premium and advertising revenue.
“Over the past few quarters, Spotify has significantly exceeded its MAU guidance,” White added. “Spotify has also generated benefits among Premium subscribers, although to a lesser extent than MAU.”
For the next quarter, Spotify said it expects 224 million Premium subscribers and 572 million total monthly active subscribers.
Analysts are largely bullish on Spotify (SPOT). Have a BUY rating from the authors of Seeking Alpha, while Wall Street analysts rate it as BUY. In contrast, Searching Alpha’s quantitative system, which consistently outperforms the market, rates SPOT as HOLD.
