Evercore ISI analyst Mark Mahaney is adding Spotify to the firm’s “Tactical Underperform” list ahead of earnings based on concern that given the 40% rally in shares year-to-date that expectations are highly elevated into the print. The firm sees two specific challenges to current Street estimates: one, that Q1 operating income estimates likely do not fully reflect the impact from unanticipated social charges; and two that the Q2 MAU outlook for 20M net adds “seems aggressive.” The firm, which believes its own outlook for 10-15M net adds is “more reasonable,” has an Outperform rating on Spotify shares.
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