On Thursday, Benchmark reiterated its Buy rating on Spotify Technology SA (NYSE:SPOT) with a steadfast price target of $520.00. The stock, currently trading at $494.80, has delivered an impressive 141% return over the past year, according to InvestingPro data. The firm's analysis included a survey of a diverse group of Spotify users in the United States, focusing on their current and anticipated future use of the platform's various offerings such as music, podcasts, and audiobooks.
The survey uncovered several key insights, including that 11% of Spotify's Premium subscribers are considering downgrading their service. Despite this, there's a 15% engagement rate with podcasts on the platform. This engagement contributes to Spotify's robust financial health, with InvestingPro analysis showing an 18.5% revenue growth and strong cash flows that well exceed debt obligations.
Furthermore, the number of audiobook listeners was higher than Benchmark had anticipated, with a significant portion of these listeners engaging exclusively with Spotify for their audiobook content.
The research also revealed that half of the survey respondents are open to paying for higher quality audio options, such as Lossless audio, and expressed interest in exclusive content for superfans. This indicates a potential for Spotify to tap into new revenue streams by catering to users' willingness to invest in enhanced audio experiences and exclusive content.
Benchmark's continued support for Spotify's stock with a Buy rating and a $520.00 price target suggests confidence in the company's ability to maintain its user base and explore additional monetization opportunities, despite some users considering downgrading from Premium services.
While trading near its 52-week high of $506.47, InvestingPro analysis indicates the stock may be overvalued, with 16 additional exclusive insights available to subscribers through the comprehensive Pro Research Report.
In other recent news, Spotify Technology SA has been in the spotlight with analysts from various firms providing their insights. UBS reiterated a Buy rating on Spotify, highlighting the company's impressive 20% growth in top-line revenue and increased free cash flow. The firm anticipates Spotify to sustain its momentum with over 13% growth in FXN revenue for 2025. Goldman Sachs (NYSE:GS) also maintained a positive stance on Spotify, focusing on the company's pricing strategy and potential in the audiobook market.
However, IndeRes initiated coverage on Spotify with a Reduce rating, questioning the risk/reward balance due to the company's current trading multiples. Canaccord Genuity (TSX:CF) raised its price target for Spotify, citing the company's solid performance and significant improvement in gross margins and operating profit. Lastly, Citi analyst Jason Bazinet increased the stock price target for Spotify to $500 while maintaining a Neutral stance.
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