Stock of the Day

January 21, 2025

Spotify Technology (SPOT)

$712.80
-$0.02 (-0.0%)
Market Cap: $145.75B

About Spotify Technology

Spotify Technology S.A., together with its subsidiaries, provides audio streaming subscription services worldwide. It operates through two segments, Premium and Ad-Supported. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers. This segment sells directly to the end users. The Ad-Supported segment provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its users on their computers, tablets, and compatible mobile devices. The company also offers sales, distribution and marketing, contract research and development, and customer and other support services. Spotify Technology S.A. was incorporated in 2006 and is based in Luxembourg City, Luxembourg.

Spotify Technology Bull Case

Here are some ways that investors could benefit from investing in Spotify Technology S.A.:

  • The current stock price is around $671, reflecting a positive trend in the company's market performance.
  • Spotify Technology S.A. has received multiple "buy" ratings from analysts, indicating strong confidence in its future growth potential.
  • Institutional investors own a significant portion of the company, with over 84% of shares held by such entities, suggesting strong institutional support.
  • Recent analyst reports have set target prices significantly higher than the current stock price, indicating potential for appreciation.
  • The company has shown resilience in its market capitalization, which is currently around $137 billion, highlighting its strong position in the industry.

Spotify Technology Bear Case

Investors should be bearish about investing in Spotify Technology S.A. for these reasons:

  • The stock has a high price-to-earnings ratio, which is currently around 112.79, suggesting that it may be overvalued compared to its earnings.
  • Recent fluctuations in stock price indicate volatility, which could pose risks for investors looking for stable returns.
  • Despite positive ratings, there are still several analysts who have issued "hold" ratings, indicating caution among some market experts.
  • The competitive landscape in the streaming industry is intense, with numerous players vying for market share, which could impact future growth.
  • Market conditions can change rapidly, and any downturn could adversely affect the stock's performance, making it a riskier investment.

Why Goldman Sachs Just Upgraded These 3 Stocks and What It Means

Written By Gabriel Osorio-Mazilli on 1/14/2025

Goldman Sachs upgrades

Investors often have access to the best minds on Wall Street without even knowing it most of the time, and this is a critical piece of information everyone should keep track of to reverse engineer what analysts are suddenly becoming bearish on. When Wall Street analysts decide to upgrade a stock’s rating and valuation, it usually pays to attempt to understand the decision and its reasoning.

Because of this, investors will want to remove the list of stocks that Goldman Sachs recently decided to upgrade and boost. This is especially the case since the bank also recommended their underlying sectors within their latest 2025 macro outlook report, pointing to opportunities in the energy sector while also making it clear that robust business models will be the ones to win this year.

That being said, it is names like Spotify Technology (NYSE: SPOT) that come as a potential winner with double-digit upside in the technology sector, accompanied by shares of recently beaten down CrowdStrike Holdings Inc. (NASDAQ: CRWD), and then topping off the list at the front of the recent crude oil breakout past $75 is drilling services provider Patterson-UTI Energy Inc. (NASDAQ: PTEN) that made it to Goldman Sachs’ list of stocks to upgrade recently.

Spotify: Subscription-Based Businesses Will Win in 2025

Goldman Sachs should boost a company like Spotify entering 2025, as their macro outlook report did point out potential tail risks in the broader S&P 500 due to high valuations. This means that investors will likely want to rotate their capital into companies that offer more stable and predictable financials.

This is where Spotify stock comes into play. As most of its revenue comes from subscriptions and is, therefore, recurring, both investors and Wall Street analysts can safely and accurately predict the company’s financials into the future and value the stock accordingly.

The market agrees with this as the stock has now pushed up to 93% of its 52-week high, implying that bullish momentum will help it move into the new year. More than that, Wall Street analysts now forecast up to $11.8 in earnings per share (EPS) for the coming 12 months, a net increase of 33.75% from today’s $8.8 EPS.

Right along with this double-digit EPS growth potential is the new Goldman Sachs buy rating, placed in January 2025 alongside a $550 valuation for Spotify stock. To prove these new views right, investors would have to ride the company higher by as much as 20% from today’s prices.

CrowdStrike Stock Rounded Up New Fans

Analysts at Goldman Sachs weren’t the only ones to express their optimism about CrowdStrike stock recently; those from State Street decided to boost their institutional holdings by 2.9% as of November 2024. After this new allocation, the group’s net position reached a high of $2.7 billion, or 3.9% ownership in the company.

After a major sell-off following an outage over the past few quarters, the stock had been beaten down to levels that made it an undeniable buy. However, even after recovering to as much as 88% of its 52-week high, these analysts still rate CrowdStrike stock a Buy as of December 2024. This time around, however, they also placed a $415 price target on it.

This new valuation would mean the stock needs to rally by as much as 19% from today’s price, giving investors a lot to consider moving forward into 2025. This stock is as attractive today as ever because of the way the world economy is moving now.

As more business is done online and everyone’s information is stored in company databases, companies like CrowdStrike—providing cybersecurity services—become key to future economic growth.

Patterson-UTI Energy: A Buffett Bet Is Never a Bad Bet

When Goldman Sachs mentioned that, out of all commodities, they see more upside potential in oil, a lot of traders had an “a-ha” moment and connected the dots behind Warren Buffett buying up to 29% of Occidental Petroleum Co. (NYSE: OXY), and he wasn’t alone. It turns out hedge funds have also been stacking up oil futures recently in a similar bet.

The advantage for retail investors is that they can invest in smaller companies, such as Patterson-UTI, which has a market capitalization of only $3.3 billion. A company this small would be way out of Buffett’s sphere, or any other institutional buyer, for that matter, but not for retail investors.

Because it is at the forefront of the industry’s value chain, it is set to get paid first and see the benefits of EPS growth before all other peers.

This is why Goldman Sachs analysts felt so comfortable placing a $10 per share valuation on this stock along with a Buy rating as of December 2024. This new view means up to 18% upside for investors.

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