Spotify Stock Slips After Cracking a Record High — Is SPOT Gonna Hit $400?

Spotify stock cooled slightly during trading on Friday, September 27th, after cracking a record high earlier in the week.

Spotify stock (NYSE: SPOT) has cooled after touching a record high of nearly $400 per share following TikTok Music’s shutdown announcement. Ahead of the streaming giant’s newly scheduled Q3 2024 earnings release, where will shares go from here?That question is front of mind for many – including the long list of analysts who are banking on continued SPOT growth in the coming months. We’ve already covered the corresponding ratings and target prices, some of which anticipate Spotify stock cracking $500 per share, in detail.

But we’ve also acknowledged the smaller number of less enthusiastic SPOT positions, which, generally speaking, stem from concerns about subscriber growth and content costs. Furthermore, when trading wrapped today, Spotify stock was worth $369.20 per share – down nearly 3% from open and roughly $20 from the initially mentioned 52-week high.

It is, of course, too early to tell whether the dip is a sign of things to come. There’s always a degree of uncertainty in the market, and particularly today’s market. Previously, SPOT in 2021 found itself in a similar value position, complete with bullish analyst forecasts, before tumbling beneath its IPO price the next year.

Focusing on what we do know, however, there are a couple key differences between the 2021 version of Spotify and its comparatively lean operation today.

In short, much (but not all) wasteful spending has been trimmed, profitability is now a key objective as opposed to an essential impossibility, management has embraced price increases, and multiple expansions (audiobooks, video, and more) are underway.

On the other side of that coin, though, SPOT’s latest ascent looks to be fueled in large part by expectations of continued subscriber growth and profitability. Few took notice of Spotify’s monthly-user miss in Q2 (probably because subscribers topped guidance), but user additions may be slowing for the business.

Running with the point, a Spotify profit and/or subscriber miss in Q3 would, to put it mildly, be a very big deal. The company yesterday disclosed that it would post those third-quarter financials after market close on Tuesday, November 12th.

(While not necessarily worth reading into, the last time Spotify revealed quarterly earnings after market close as opposed to before trading’s start was Q3 2022, when it missed guidance for both margin and operating income/loss).

As we await that earnings release, with Spotify insiders prohibited by company policy from selling shares at present, tracking high-value SPOT sales could prove insightful. (For another pertinent parenthetical, Spotify’s insider-trading blackout policy specifically prevents execs and board members from buying or selling shares beginning on “the fifteenth day of the last month of each fiscal quarter” – or, for Q3, the current month – until “the open of the market of the first trading day after the public release of the quarter’s earnings.”)

In the second quarter, Select Equity Group decreased its Spotify holdings by 17.9% to approximately 141,000 shares, a regulatory filing recently indicated.