By Spotify’s stock price has skyrocketed, increasing over 150% this year. According to renowned analyst Barton Crockett, there could be even better times ahead for the streaming audio company.
Rosenblatt Securities Analyst Upgrades Spotify Shares
Rosenblatt Securities analyst Barton Crockett has recently upgraded his rating on Spotify shares from Neutral to Buy. He has set a new target price of $300, a substantial increase from the previous $150. As of now, the stock is trading slightly higher at $198.80, while the S&P 500 remains flat.
Weathering a Turbulent Period
This positive sentiment comes amidst a period of significant turmoil for Spotify. On December 4th, the company announced a workforce reduction of 17%. Spotify CEO Daniel Ek explained that this decision aimed to realign the company with its future goals and ensure that it is appropriately sized for upcoming challenges. Ek emphasized the importance of bridging the gap between their financial goals and current operational costs.
Shortly after, it was disclosed that CFO Paul Vogel would be stepping down on March 31, 2024. This move was driven by the evolving nature of Spotify’s business, suggesting a need for a different approach in managing their finances.
Spotify’s Evolutionary Path
Over the past two years, Spotify has been actively readjusting its spending to align with market expectations while simultaneously funding opportunities for substantial growth. CEO Daniel Ek touched upon the delicate balance required to achieve these objectives and stated that Spotify is entering a new phase necessitating a CFO with a diverse range of experiences.
As Spotify continues on its upward trajectory, analysts and investors eagerly await further developments in the company’s journey.
Spotify’s Future Outlook: Scary or Promising?
Analyst Rosenblatt’s Crockett believes that Spotify’s recent moves can be seen as either “scary” or “promising.” However, he falls into the latter camp, expressing optimism about the company’s future prospects.
Sales Growth and Cost Controls
Financial Projections
According to Crockett, Spotify’s operating profit has the potential to surpass €1 billion in 2024, approximately $1.1 billion, which is well above Street consensus estimates. He also believes that adjusted Ebitda could reach €1.15 billion, more than double the Street consensus forecast of €520 million. Additionally, he expects the headcount reduction to result in annual cost savings of €300 million.
Future Revenue and Profit Growth
Operating Margin Projection
The analyst predicts that Spotify’s operating margin could reach 10% in 2027, a significant improvement from the estimated -3.5% in 2023.
In conclusion, Crockett’s analysis paints a positive picture for Spotify’s future performance and potential profitability. It remains to be seen if the company can deliver on these expectations.
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