Music streaming platform Spotify (SPOT) is preparing to release its second‑quarter earnings results on July 29, before the market opens. Analysts currently expect earnings per share to come in at $2.32 on revenue of $5.01 billion, compared to $1.56 and $4.1 billion, respectively, during the same quarter last year. Beyond earnings and revenue, subscriber growth remains a key catalyst for the company. Indeed, Wall Street expects the number of Monthly Active Users to reach 689 million, up from 678 million in the previous quarter (as illustrated below).
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At the same time, Premium subscribers are projected to grow to 273 million from 268 million last quarter. However, last quarter’s EPS came in at $1.26, which fell well short of the estimate of $2.57 and has kept some investors cautious heading into this report. Nevertheless, investors will also be paying close attention to a few other areas that could influence the stock’s reaction.
These include the balance between premium and ad‑supported users, trends in advertising revenue, and whether Spotify can maintain healthy margins. In addition, the firm’s planned “superfan” tier (a new tier that will be more expensive but offer more features) and improved ad monetization of free users could act as catalysts for future growth. As a result, although some remain cautious, analyst sentiment has been improving recently. In fact, Oppenheimer four-star analyst Jason Helfstein upgraded the stock to a Buy rating and set an $800 price target due to the possibility of expanding beyond premium subscribers.
What Do Options Traders Anticipate?
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting an 8.85% move in either direction.
Is SPOT Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SPOT stock based on 19 Buys, seven Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average SPOT price target of $764.19 per share implies 8.9% upside potential. At the same time, TipRanks’ AI analyst has an Outperform rating and an $805 price target.
