Spotify Technology stock hit a high note Wednesday after the music streamer rocked Wall Street with better-than-expected subscriber growth in the third quarter.
Late Tuesday, the audio entertainment giant said it added 6 million premium subscribers in the September quarter, topping estimates for 5.2 million. Spotify ended the third quarter with 252 million total paying subscribers worldwide.
The company also tallied 640 million monthly active users in the third quarter vs. Wall Street's target of 639 million. Spotify offers an ad-supported service in addition to its commercial-free subscription service.
On the stock market today, Spotify stock popped 11.4% higher to close at 467.37. In intraday trading, it notched a record high of 473.
At least 20 analysts raised their price targets on Spotify stock after the Q3 earnings report.
Spotify impressed analysts with upside to its gross profit margin and operating income. Recent service price increases helped drive the improved profitability.
The company's gross margin was 31.1% in the third quarter, vs. expectations for 30.2%. For the current quarter, Spotify expects a gross margin of 31.8% vs. the consensus estimate of 30.6%.
Spotify Stock Is On Two IBD Lists
"Spotify has already won the global audio streaming race (driven mainly by their best-in-class user interface/product)," Pivotal Research analyst Jeffrey Wlodarczak said in a client note. Spotify has shown that it can raise prices and still generate solid subscriber growth, he said.
Wlodarczak reiterated his buy rating on Spotify stock and raised his price target to a Street-high 565 from 510.
On Sept. 19, Spotify stock broke out of a six-week consolidation pattern at a buy point of 359.38, according to IBD MarketSurge charts.
Spotify stock is on two IBD lists: Global Leaders and Tech Leaders.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
