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Barclays Sees 62% Upside In Spotify Post Q1 - Here's Why

Benzinga · 04/29/2022 15:19
  • Barclays saw Spotify Technology SA (NYSE:SPOT) report total MAUs, premium subs, and revenue in line with consensus. 
  • The 2Q revenue guidance also came in line, but gross margins and OI were missed primarily due to continued core operating improvements across music, podcast, and FX headwinds. 
  • Furthermore, these two factors will likely remain for the next few quarters before lapping/improving in 2023. 
  • Barclays REMAINED OVERWEIGHT, WITH A price target of $170 (61.8% upside).
  • Positives for 1Q: Premium sub revenue was up 23% y/y ex-fx (up from 22% last Q), with both MAUs and ARPU coming ahead of expectations. ARPU growth benefited from a favorable product mix shift and is the last full Q of price increase benefit. 
  • Podcast metrics remained strong, with the share of overall consumption hours reaching a record high once again with consumption rates growing double-digits y/y. 
  • As a result, podcast revenue was likely up triple digits again y/y, while music ad-supported revenue also saw growth from increased impressions and double-digit growth in CPMs.
  • However, ad revenue decelerated nearly 10pts sequentially and will likely remain ~30% y/y growth in 2Q (was trending mid-30s before Russia's invasion). 
  • Price Action: SPOT shares traded lower by 0.45% at $102.22 on the last check Friday.
  • Photo by Photo Mix from Pixabay