Spotify Technology
stock has almost doubled to far this year, but the stock was spiraling lower on Thursday after an analyst downgraded the music and audio streaming service and said its “darkest days” are ahead.
Spotify stock (ticker: SPOT) has soared 95% year to date as of Wednesday’s close, thrashing the
S&P 500’s
11% rise. But shares are down 2.3% to $150.25 in Thursday morning trading. The move lower came after Monness, Crespi, Hardt & Co. analyst Brian White turned a bearish eye on the company.
The MCH analyst downgraded Spotify stock to Neutral from Buy, and removed his price target on the shares, which closed at $153.75 on Wednesday, citing risks from a wider downturn amid price hikes being rolled out by Spotify.
“Given this strong outperformance and our mounting concerns surrounding the potential collateral damage from this downturn, we are stepping to the sidelines,” White said.
Wall Street, more broadly, remains bullish on Spotify, with the stock garnering an average rating of Buy among 26 analysts surveyed by FactSet—though there are some signs that even upbeat analysts think the best gains are over. The average target price of $166.34 implies an upside of about 11% from current levels for a stock that has already ripped considerably higher this year.
“Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, expanding its audio offerings, and improving its cost structure,” White wrote—echoing his once-bullish sentiment. “However, competition is fierce, margins thin, and we believe the darkest days of this downturn are ahead of us.”
Write to Jack Denton at [email protected]
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