Spotify Technology is the IBD Stock Of The Day as one Wall Street analyst says the streaming music giant is on pace to reach 1 billion monthly active users worldwide by 2030. Spotify stock is near a buy point.
In a client note Sunday, KeyBanc Capital Markets analyst Justin Patterson predicted that Spotify could achieve over 1 billion monthly active users and over 400 million premium subscribers by 2030. Those estimates are above Wall Street's forecasts by 3% and 4%, respectively, he said.
"We believe this supports at least 15% annual (revenue) growth, with potential to achieve Spotify's 20%+ target as new products ramp," Patterson said. "With consensus looking for just 11% annual revenue growth, we believe 2030 (estimated) earnings power is materially understated."
Spotify ended the second quarter with 626 million monthly active users and 246 million premium subscribers. Spotify offers an ad-supported service in addition to its commercial-free subscription service.
Patterson reiterated his overweight rating on Spotify stock and raised his price target to 440 from 420.
Spotify Stock Near Buy Point
In late morning trades on the stock market today, Spotify stock rose more than 1% to 342.59.
Spotify stock is in a seven-week consolidation pattern with a buy point of 359.38, according to IBD MarketSurge charts. In addition, Friday's high of 344.52 could offer an early entry, based on IBD analysis.
Last week, Jefferies analyst James Heaney called Spotify stock a "top pick." He rates SPOT stock as buy with a price target of 420.
Also last week, Bloomberg reported that Spotify is looking to broaden its subscription service with video. The audio-entertainment company has approached video-oriented creators to distribute their shows on Spotify in addition to Alphabet's YouTube.
Spotify stock ranks second out of 20 stocks in IBD's Computer Software-Education and Media industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 83 out of 99.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
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