SPOT - Spotify Stock Sheds All Gains After Q1 Earnings But Analysts Are Impressed With the Performance | Benzinga
On Tuesday, Spotify Technology SA (NYSE:SPOT) reported fiscal first-quarter 2024 revenue of $3.95 billion (3.64 billion euros), up 20% year-on-year, beating the consensus of $3.85 billion. EPS of $1.05 (97 cents) beat the consensus of $0.70. Analysts offered their takes on the stock.
J.P. Morgan analyst Doug Anmuth maintained Spotify with an Overweight and raised the price target from $320 to $365.
Spotify is the largest pure-play audio streaming service and is both driving and benefitting from the ongoing secular shift from transaction-based to access-based streaming models, according to the analyst.
Gross margin strength is driven by music & marketplace gains, podcast improvement, other cost of revenue leverage, & advertising, with additional cost efficiencies helping to drive significant operating and net income growth & meaningfully higher FCF in 2024, Anmuth said.
Notably, Spotify remains confident in achieving the medium-term financial targets laid out at its 2022 Investor Day of 30-40% gross margins and 10%+ operating margin, the analyst noted.
He expects revenue growth to accelerate in 2024, supported by more balanced growth across Premium Subscribers. While MAU growth has decelerated, it remains strong at +19% in the first quarter, and Spotify will ramp up S&M spending through the year to support top-of-funnel improvements.
Anmuth projected 2024 net adds of 81 million for MAUs (vs. 113 million in 2023) & 27 million for Premium Subscribers (vs. 31 million in ...