Raymond James Monday said that Spotify has suffered a severe decline in 2018. Andrew Marok, an analyst at Spotify, upgraded its stock to outperform the market perform. He noted that the stock “is not broken” in spite of its 52% drop for 2022. Most of the negative news about the company have already been priced in. He wrote that the “sentiment pendulum had swung towards overly pessimistic” in a note. Spotify is still the leader in streaming music and has key competitive advantages such as a global presence, best user experience, differentiated podcasting content, and a superior user experience. Spotify shares are under threat this year due to the massive selling of tech-related companies as interest rates rise. Spotify is working to increase its ad support business. Spotify’s first quarter report stated that the company had ad revenue of 282 millions euros. That is 11%. Analysts had predicted that ad supported revenue would be 304.1 millions euros, but the stock dropped on the announcements. Marok said that there is some “collateral harm” due to Netflix’s subscription growth problems, but pointed out that Spotify’s “Spotify’s competitive position in the market isn’t as difficult.” Netflix has to contend with a growing number of streaming services. However, there is stability in the market for streaming music. The commoditization and sale of streaming music is a better option than video. Content owners want to make money by selling their content directly to customers. An analyst targets $150 for the stock. This would indicate a 33.6% upside from Friday’s closing.
