Spotify Technology stock has stalled since it gapped up after its second-quarter earnings report. But a Wall Street analyst sees several tailwinds for Spotify in the second half of 2024.
KeyBanc Capital Markets analyst Justin Patterson said Spotify stock has room to appreciate thanks to several second-half 2024 catalysts. He rates Spotify as overweight with a price target of 420.
On the stock market today, Spotify stock dropped 1.9% to close at 336.07.
In a note to clients Monday, Patterson identified three "tailwinds" for the streaming music leader in the months ahead.
First, the company's decision to back away from exclusive content, such as podcasts, will benefit profitability. And so far, the move does not appear to be impacting premium subscriber growth or engagement, he said.
Spotify Stock Moving Sideways
Second, Spotify management is looking at more types of service plans. They could include the launch of a high-end plan, bundles and entering more geographies, Patterson said.
And finally, possible price hikes by rivals could make Spotify look more attractive to consumers, he said.
"We believe it is increasingly likely Spotify's competitors raise price before year-end," Patterson said. "Given Spotify's product improvements, we believe the company can continue capturing share as pricing becomes more consistent across the industry."
On July 23, after its Q2 report, Spotify stock hit a buy point of 331.08 out of a flat base, according to IBD MarketSurge charts. Since then, Spotify has traded mostly in the 5% buy zone, which runs to 347.63.
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