2024-04-07 08:33:00 ET
Spotify (NYSE: SPOT) has the potential to greatly increase its free cash flow generation as the music streaming leader boosts prices and better monetizes its users. That's the view of analysts at Pivotal Research, who maintained a buy rating on the stock and boosted their price target from $330 to $390 on Friday. That new price target represents a potential upside of about 26%.
While Spotify's user base is split between premium subscribers and ad-supported users, the premium subscription service generates the bulk of the company's revenue. Of the 3.67 billion euros in total revenue Spotify reported for the fourth quarter of 2023, premium subscriptions accounted for 3.17 billion euros.
It's the potential for Spotify to wring out more revenue from its premium subscribers that has Pivotal Research excited about the stock. Average revenue per premium user was just 4.60 euros in the fourth quarter.
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Spotify Stock Has 26% Upside, According to 1 Wall Street Analyst