What Impacted Spotify Stock Yesterday?



Stock gained 6.6% on November 26

The last quarter of 2018 has been very volatile. Investors have lost significant wealth since the start of October 2018. The holiday season though has more often than not resulted in investor optimism and driven markets higher. In this series, we’ll look at five tech stocks that rose over 5% yesterday. Most of them seem to be on the road to recovery after trading close to 52-week lows.

Music streaming company Spotify (SPOT) rose 6.6% on November 26 to close at $138. The stock recently touched a 52-week low price of $120.49. Despite its 6.6% gain yesterday, the stock is still down 7.8% this month and 23.7% since the start of October 2018. Spotify has been impacted by competition from Apple Music, especially in the United States, Japan, and Canada. The company has also seen a slew of top management exits recently.

Investment banks such as JP Morgan (JPM) and Evercore ISI have downgraded the stock and reduced price targets. Nomura, Barclays, and Wells Fargo also cut their target price for Spotify.

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Spotify eyeing India expansion

Spotify recently announced that it is now entering 13 new markets including the Middle East and Africa. The company is planning to enter India (INDA) within the next six months and will offer an extended trial period there.

India’s music streaming market is dominated by local services such as Saavn and Gaana. Apple Music and Amazon (AMZN) are also popular in the country. So it might be a difficult market for Spotify to gain traction.

The company expects robust revenue growth and it might report a GAAP profit in fiscal 2021. However, a GAAP profit might only be possible if international expansion is fruitful and if Spotify can fight off competition.


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