Spotify Stock Slumps Nearly 30% Year-Over-Year Amid Cost Pressures and Lowered Price Targets
Spotify Technology S.A. stock is down nearly 30% year-over-year as UBS drops its price target due to cost pressures, according to reports. Trading at approximately $481 on Monday afternoon, the streaming platform’s shares face downward momentum even as broader market sentiment remains bullish and management pushes to diversify monetization avenues.
UBS Lowers Target While Maintaining Buy Rating
UBS has softened its price target for Spotify due to ongoing cost pressures. Despite the reduction, UBS analyst Batya Levi maintains a “BUY” rating on the stock, citing the company’s continuous launch of diversified products and monetization features. UBS anticipates third-quarter results will align closely with management’s initial outlook, alongside expectations that premium revenues will grow by 15.2% on a foreign-exchange-neutral basis, compared to 16% in the previous quarter. Foreign-exchange-neutral advertising revenue growth is projected to accelerate to 8.6% as comparisons against lower podcast inventory levels from last year begin to soften.
Wall Street Maintains Optimistic Consensus Despite Headwinds
Major banks and analysts continue to issue “BUY” or “Strong Buy” recommendations for Spotify, with 12-month consensus price targets sitting between $593 and $617. This consensus points toward an estimated 25% to 30% upside from trading levels hovering between $472 and $491 in early October. However, individual firm forecasts show considerable variance, spanning a broad range from $400 to over $720.
- Evercore ISI: Outperform rating with a price target raised to $700 from $650 on September 29.
- Bank of America: Buy rating with a maintained price target of $685 on September 24.
- Morgan Stanley: Buy rating with a reiterated price target of $640 on September 28.
- KeyBanc: Overweight and Buy rating with a price target lowered to $660 from $680 on October 1.
- Wells Fargo: Buy rating with a reiterated price target of $570 on September 30.
Spotify Revenue Grows Despite Competition from Apple Music
Earlier this year, Apple Music surpassed Spotify’s subscriber count within the United States, introducing additional factors into the platform’s recent price softness. Despite these pressures, Spotify posted a 14% year-over-year revenue growth in the second quarter, powered by a 16% increase in premium revenue following recent subscription price increases. Barclays highlighted that Spotify’s streaming growth closed the gap with major music labels, recording a 14.6% growth rate compared to the 8.3% average for major music companies, though the performance gap remains at its widest margin in six quarters.
Frequently Asked Questions About Spotify’s Market Performance
Why did UBS lower its price target for Spotify?
UBS lowered its price target primarily due to persistent cost pressures affecting the streaming platform, though the firm maintained its “BUY” rating based on anticipated progress toward financial targets and product monetization.
What is the current Wall Street consensus price target for Spotify?
The 12-month consensus price target among major analysts sits between $593 and $617, suggesting an estimated 25% to 30% upside from early October trading levels.
How did Spotify’s Q2 revenue perform year-over-year?
Spotify reported a 14% year-over-year revenue growth in the second quarter, driven by a 16% increase in premium revenue following recent price hikes.