Spotify Technology stock, which has seen a remarkable surge of nearly 95% year-to-date, is now facing a downturn. Analyst Brian White from Monness, Crespi, Hardt & Co. downgraded the music streaming service, warning that its “darkest days” are yet to come.
In response to Spotify’s recent price hikes, White has downgraded the stock from Buy to Neutral and removed his price target. This news comes as shares have dropped 2.3% to $150.25 in Thursday morning trading, following Wednesday’s close at $153.75.
Despite White’s concerns, Wall Street analysts overall remain bullish on Spotify. With an average rating of Buy among 26 analysts surveyed by FactSet, the stock has an average target price of $166.34 – indicating a potential 11% upside from its current levels.
White acknowledged Spotify’s strengths, including its favorable long-term trend, platform enhancements, expansion into the digital ad market, and improved cost structure. However, he expressed caution about fierce competition and thin margins, believing that the company will face even greater challenges in the future.
While Spotify has enjoyed significant growth this year, investors should be cognizant of the risks involved in a downturn. As the music streaming market becomes more competitive, Spotify must navigate these challenges to sustain its upward trajectory.