SPOT inched upward in Tuesday trading despite broader market headwinds (Photo Credit: Yahoo! Finance)
Barclays becomes the latest to drop Spotify’s price target amid a broader bullish sentiment, with SPOT bouncing back this week after a major dip.
It’s been a volatile start this year for Spotify’s stock (SPOT), shares of which dipped again last week after an unimpressive first couple of weeks in January. Now, Barclays joins the growing list of analysts downgrading the stock’s price target—a list that already includes Goldman Sachs, Wells Fargo, Oppenheimer, Bernstein, UBS, Cantor Fitzgerald, and Guggenheim.
Barclays’ rating maintains at “overweight,” with a target price of $625 (reduced from $700). But despite its reduced target price, Barclays sees Spotify’s subscriber trends as strong and expects profit volatility to ease later in the year.
The price cuts over the last month stemmed from the Goldman Sachs downgrade late last year. So far, we’ve seen Wells Fargo cut its target for SPOT from $750 to $710 with an “overweight” rating, while Oppenheimer lowered its SPOT target from $825 to $750 with an “outperform” rating. Bernstein analysts lowered their SPOT price from $830 to $650 with an “outperform” rating. But overall ratings across the board have remained bullish.
To its credit, SPOT has been on the rise (albeit moderately so) this week after things looked dire ahead of last weekend. The stock dipped below $500 but managed to rebound up to just over $511 at market close on Tuesday. That’s not fantastic—especially when you hold it up against last Monday’s closing price of $530. But that’s thanks in no small part to the broadly anticipated across-the-board price hikes in the United States (and Estonia and Latvia).
Despite the increase in revenue gains that investors could expect to see from those $1-plus price hikes, the reality of concerns over competitors with fairer prices for a better product appears to have set in, at least on Wall Street.
There are plenty of reasons for Spotify to be trending downward: the maturing music streaming sector leading to subscriber churn, the continued price hikes, the questionable artist payout, the push into audiobook bundles, the departure of co-founder Daniel Ek from the CEO position over investments in AI military drone software—pick your poison.
Trading over the weekend remained precious, but things have once again evened out to that apparent sweet spot of just above $500. Last week, that was down over 11% year-over-year and down approximately 30% from its previous highs in September.
