Spotify (SPOT) is being seen as the leading entity in the streaming music industry, surpassing major competitors such as Apple Music, Amazon, and Sirius XM. The stock is currently consolidating just below its historical peak, and similar to Netflix’s recent performance post-earnings, it is anticipated that SPOT may soon reach new record highs. SPOT is included in the Tactical Alpha Growth (TAG) portfolio and the Active Opportunities portfolio at Inside Edge Capital, LLC. With upcoming third-quarter earnings expected on November 12, there is consideration to increase holdings if results are strong.
Previously, in July, SPOT was trading at $343. It has now reached $386, nearing its record high of $387, established in 2021. Analyzing the weekly chart, SPOT resides in the middle of the trend channel, considered neutral—neither oversold at the lower end nor overbought at the upper end. This positions SPOT potentially for an upward movement.
The daily chart displays a developing bull-flag pattern just below the significant $387 level. A surge in accumulation volume, similar to that of April and September 2024, could propel SPOT to new highs. The company’s earnings have shown remarkable growth: from a loss of $3.09 per share in 2022 to a predicted $6.37 in 2024, with a forecast of over 40% growth in 2025, reflecting increasing free cash flow.
As part of the same sector as Netflix, Spotify may experience similar market trends, particularly in light of Netflix exceeding expectations and achieving new highs, partly due to subscriber growth through its ad tier. Spotify is exploring new membership tiers, which could further enhance its cash flow. The integration of AI to enhance content recommendations is another strategy Spotify is employing, akin to what Meta has done with Instagram and Facebook, which have seen positive stock performance. Meta, like Netflix, is nearing new record highs, indicating a robust trend for companies within this sector.
Disclaimer: Todd Gordon, Founder of Inside Edge Capital, owns SPOT both personally and through his firm. The opinions expressed are those of the contributors and do not reflect those of CNBC or affiliated entities. The content is intended for informational purposes only and should not be considered financial advice.
