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Spotify Announces Stock Repurchase Program
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Spotify Announces Stock Repurchase Program

Shares of Spotify (SPOT) gained 1.1% in early trade on Friday after the Swedish audio streaming and media services provider announced that it would “commence a stock repurchase program beginning in the third quarter of 2021.”

In its release, the company said, “Repurchases of up to 10 million of the Company’s ordinary shares have been authorized by the Company’s general meeting of shareholders, and the Board of Directors approved such repurchases up to the amount of $1.0 billion.”

The plan comes with a termination date of April 21, 2026, and repurchases will be carried out as and when determined by Spotify in the open market or private transactions. (See Spotify stock charts on TipRanks)

Factors like price, general business and market conditions, along with alternative investment opportunities, will influence the company’s decision to buy back shares. Also, the repurchase program is in sync with Spotify’s capital allocation strategy, under which it prioritizes investments in growth opportunities.

The Chief Financial Officer at Spotify, Paul Vogel, said, “This announcement demonstrates our confidence in Spotify’s business and the growth opportunities we see over the long term.”

On August 2, Wells Fargo analyst Steven Cahall maintained a Sell rating on Spotify with a price target of $200 (2.5% downside potential from current levels).

Cahall noted, “We’ve analyzed MAU growth from smartphone penetration and think consensus remains too optimistic, plus growth should come from less profitable markets. Advertising has potential upside vis-a-vis Pandora’s ARPU, but we don’t think it’s enough.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 9 Buys, 5 Holds and 2 Sells. The average Spotify price target of $297.07 implies 44.9% upside potential from current levels.

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Spotify with 9.4% of investors on TipRanks increasing their exposure to the stock over the past 30 days.

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