Spotify Stock Slips Pre-market As Analyst Steps To Sidelines: Retail Turns Cautious

Spotify Technology S.A. (SPOT) stock fell in Friday’s premarket trading after an analyst tempered his opinion regarding the music streaming service.

Wolfe Research analyst Devin Brisco downgraded Spotify stock to ‘Peer Perform’ from ‘Outperform’ and removed the previous $560 price target, TheFly reported. 

According to the analyst, the Luxembourg-based company’s revenue forecasts “look full” when weighed against the price hikes, marketing cuts and the saturation that is beginning to be seen in the developed markets. 

However, Brisco sees Spotify as a highly durable growth story with an improving return on invested capital (ROIC) profile and plenty of optionality. He also said the stock’s valuation appeared to be “reasonable.”

On Wednesday, UBS analysts maintained a ‘Buy’ rating and raised the price target to $540 from $485. The analysts attributed their optimism regarding continuing momentum, thanks to over 13% currency-neutral growth and the company’s focus on product enhancements that will likely support future monetization. 

UBS expects the company to continue to progress toward its long-term financial targets. It also sees multiple catalysts ahead, including the eventual launch of premium and superfan tiers, additional price increases following the roll out of product enhancements, potential upside from changes to family plans and improved advertising trends.

On Stocktwits, sentiment toward Spotify stock worsened to ‘neutral’ (53/100) from the ‘extremely bullish’ mood that prevailed a day ago. Retail chatter continued unabated resulting in ‘extremely high’ message volume.

Spotify stock watchers on the platform held mixed views on the stock. While some touted it as a "must own" stock, others see it overvalued and waited for a pull back to $450 to retake position.

Spotify stock gained 138% in 2024, hitting an all-time high of $506.47 on Dec. 4. It has risen an incremental 9.6% since the start of the new year.

In premarket trading, the stock was down 1.50% at $482.99 as of 7:13 a.m. ET.

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