Spotify Earnings Boost Stocks After Facing A Loss In The Previous Year

It is a good day for Spotify investors as the company’s third-quarter earnings results have come out. This helped the confidence of the investors go up as the shares of the company went up 10.3% to $170.63 on Tuesday before it closed on Friday. This helped the investors gain confidence about the company’s path as on Friday, Spotify’s stocks closed at $159.35, up by 6.3% for the week. The streaming giant saw a massive success following the operating loss of 247 million euros ($269 million) a year earlier. This year the company gained an operating profit of 32 million euros ($34.8 million) along with adding 6 million subscribers in the same quarter where the price increase was done.

 This third-quarter growth will be particularly helpful for the NYSE-listed, Swedish company to exceed the expectations for subscriber gain this year. Spotify’s CEO Daniel Ek said during Tuesday’s earnings call, “We walked into 2023 thinking we would do just over 20 million in net subscriber adds for the full year, but we’re actually on track to deliver 30 million.” The Morgan Stanley analysts have raised their Spotify target price from $190 to $200 on Wednesday. They did this by writing that the company is “a superior product with pricing power” in an investor note which will continue this journey of expanding gross margins.

Similarly, the analysts of JP Morgan also increased their Spotify target price from $190 to $205. They did this with the belief that the free cash flow and operating margin milestones reached in this quarter will attract more investors to Spotify. This was completely led by Anghami’s 11.5% improvement to $1.07, which means this week a total of six music streaming companies have had an average gain of 4.3%. This includes Tencent Music Entertainment of China, which will report third-quarter results on Nov. 14, has gained 7.2% to $7.13. On the other hand, another Chinese music streamer, Cloud Music, has gained 3.3% to 85.50 HKD ($10.93). The U.S.-based streaming company LiveOne has also gained 1% to $1.00.

Meanwhile this week, the 21-stock Billboard Global Music Index dropped 0.7% to 1,304.74. This marks its third consecutive weekly loss and tenth loss week in the second half of 2023. This slight decline dropped the year-to-date gain of the index to 11.7%. 13 of its 21 stocks finished in negative territory this week while seven of them posted gains. One of the 21 stocks, Round Hill Music Royalty Fund, was reported as unchanged.

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