• Spotify Technology (SPOT) rallied to a new record high on Friday, taking out the previous high posted three months ago.
• Spotify has rallied sharply in the past three sessions, overcoming the initial market disappointment with its April 29 earnings report.

Company Description:

Spotify Technology (SPOT) provides music streaming services. The company offers commercial-free music and ad-supported services to subscribers. Spotify Technology is based in Sweden. The company has a market cap of $131 billion.

Today’s Context:

Spotify has rallied sharply in the past three sessions since releasing its slightly negative earnings report on April 29, which suggests underlying buying momentum in the stock. SPOT has seen support since the earnings report from a 1.2% average increase in analyst price targets. The earnings report showed solid results for Q1, but there was some disappointment about the company’s mixed outlook for Q2. 

However, CEO Daniel Ek said that Spotify’s business is strong and is avoiding the economic turbulence that is hurting other industries. There were also some positive comments from analysts about SPOT’s medium- and long-term prospects. JP Morgan, which has an “Overweight” rating on the stock said, “SPOT continues to execute well across its medium-term financial targets.” Bloomberg Intelligence said, “Despite the overall uncertainty, the competitive moat is deepening, and the long-term outlook is positive.”

What I’m Watching: 

Spotify rallied nearly 7% on Friday and edged to a new record high. I found today’s Chart of the Day by using Barchart’s New Highs & Lows page and selecting stocks that have new 52-week highs. I then viewed the stocks on the list with the Flipcharts feature. 

What Comes Next: 

The record high signals the possibility of further gains, although it always pays to watch for any temporary downside correction. A downside correction could be used for an entry point.

Key Technical Levels for Spotify: 

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

• The Parabolic Time/Price (50) trading system issued a “Buy” signal on April 21 and has been long since then.
• Barchart’s Overall Average Opinion is an 100% “Buy.”
• All the Barchart Opinion indicators were a “Buy” as of Monday, May 5.
• Spotify has been above its 200-day moving average since January 2023.

Analyst Ratings on Spotify:

• Wall Street analysts have a consensus rating of a “Moderate Buy” with a rating of 4.33 out of 5, and price targets between $435 and $800.
• The average price target of $663.76 is 3% above Friday’s close of 644.00, suggesting some room for price appreciation.

Why It Matters: 

A breakout to a major new high can suggest that a stock has underlying strength to push even higher, although caution is always warranted.

Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance and reevaluate your stop losses at least on a weekly basis.