Spotify Technology (SPOT) stock is climbing the price charts Tuesday after the Swedish audio streaming and media company reported second-quarter earnings that beat expectations.
In the three months ended June 30, SPOT's revenue increased 20% year-over-year to 3.8 billion euros, driven by subscriber gains and price increases. The company also swung to a net profit of 1.33 euros per share from a loss of 1.55 euros per share in the year-ago period.
"We keep on innovating and showing that we aren't just a great product, but increasingly also a great business," Spotify CEO Daniel Ek said in a statement. "We are doing so on a timeline that has exceeded even our own expectations. This all bodes very well for the future."
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The company's revenue for the quarter fell short of analysts’ expectations, while its earnings topped expectations of 1.04 euros per share, according to MarketWatch.
Spotify also said its monthly active users (MAUs) came in at 626 million, representing an increase of 14% from the year-ago period and 2% from the prior quarter. Premium subscribers totaled 246 million, up 12% year-over-year and 2.9% quarter-over-quarter.
For the third quarter, Spotify said it expects total MAUs of 639 million, total premium subscribers of 251 million and total revenue of 4 billion euros.
Is Spotify stock a buy, sell or hold?
Spotify has been tearing up the price charts in 2024, rising nearly 80% year-to-date at the time of this writing. Unsurprisingly, Wall Street is bullish on the communication services stock. According to S&P Global Market Intelligence, the consensus recommendation among analysts it tracks is a Buy.
Additionally, the average price target is $351.72, which represents implied upside of nearly 6% to current levels.
Financial services firm Jefferies is one of the more bullish outfits on SPOT stock with a Buy rating and $385 price target.
"We believe SPOT has the runway via user growth and pricing to deliver sustainable 15%+ revenue growth through 2026," Jefferies analyst James Heaney said in a July 21 note. "We believe price increases coming every other year and bundling can help drive the next leg of growth."
Jefferies $385 price target represents implied upside of roughly 16% to where Spotify is currently trading.
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