Spotify (SPOT) PT Lowered to $720 at Canaccord
Canaccord analyst Maria Ripps lowered the price target on Spotify (NYSE: SPOT) to $720.00 (from $750.00) while maintaining a Buy rating.
The analyst commented: "Spotify reported solid Q1 results, with all key metrics coming in at or above expectations. The company added 10M MAUs during the quarter, including 3M net Premium subscriber additions, reflecting healthy engagement and conversion. FX-neutral revenue growth accelerated ~150 bps sequentially, reflecting continued subscriber gains and a partial quarter benefit from recent price increases in the US. Product innovation remained a key engagement driver, with the company beta launching Taste Profile in New Zealand, expanding Prompted Playlists to the US and Canada, and debuting a Fitness hub in a partnership with Peloton. The Q2 outlook, however, was mixed, with MAU guidance modestly ahead of expectations, and the Premium subscriber outlook was a bit light. Management also highlighted near-term investments in AI and new product initiatives as a deliberate strategic decision, which should persist for the next few quarters, with subscriber growth expected to accelerate in the back half. While the advertising business came in below expectations in Q1, management expects the segment to deliver improved growth in 2H as billable channels scale and the rebuilt ad stack gains traction. The stock is selling off on the print, largely reflecting near-term concerns around subscriber growth and elevated investment spending. That said, we believe the fundamental backdrop remains intact, underpinned by strong user engagement, record margins, and a monetization story that we view as still in early innings. We maintain our Buy rating."