The stock is retesting this month’s low after the reaction to its first-quarter results.
The company reported a widening loss per share, while revenue was only in line with expectations. Worse, Spotify trimmed its full-year estimate for monthly active users.
Management now expects 2021 MAUs to range 402 million to 422 million, down from 407 million to 427 million.
It’s not a huge reduction, but it does chip away at the bull thesis a bit.
Regardless, it’s what's pressing Spotify, as the stock toys with a key support area.
Trading Spotify Stock
Unless Spotify stock can reverse some of its losses, Wednesday’s action looks concerning.
While it’s declining into the key $255 to $260 range, it’s also below a number of key levels.
Specifically, the stock broke below the 50-day, 200-day, 10-week and 50-week moving averages. It also broke back below prior downtrend resistance (blue line).
Perhaps worst of all, it couldn’t hold up over $292, a level it’s tried to clear twice now this month and failed both times.
The $292 level has been support and resistance (mostly the latter) for almost a year now. To fail so epically is not a positive sign for the bulls.
Now it’s in make-or-break territory. Below $255 puts the March low in play at $249.14. A close below that and Spotify stock could test down into the $225 to $230 area.
On the upside, let’s see if the stock can find its footing and reclaim the 50-week moving average near $275. Above that puts $292 back in play, followed by the $300 level.
Over $300 and the party can really get started. But from where we’re standing now, that looks like a tall and unlikely task in the short term.
For now, see how it handles this critical support zone.