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Spotify Rises as Jefferies Grades It a Buy

Spotify will probably turn into 'the primary audio platform for creators,' Jefferies says.
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Spotify Technology  (SPOT) - Get Spotify Technology S.A. Report shares rose Friday after Jefferies began coverage of the audio streaming platform with a buy rating and $360 price target.

The company will probably turn into “the primary audio platform for creators,” Jefferies analyst Andrew Uerkwitz wrote in a report cited by Bloomberg. Spotify has “substantial” long-term opportunity and trades at a discount to other content platform companies, he said.

Spotify recently traded at $270, up 1.8%. It has eased 2% in the past six months, as competition heats up in the audio content space.

Spotify’s dominance means more loyal customers and a “longer tail of growth/margin expansion,” Uerkwitz said. In addition, new technologies are less likely to disrupt Spotify’s business model.

Meanwhile, The Wall Street Journal reports that Spotify plans to announce a podcast subscription service next week, according to knowledgeable sources.

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The company won’t make podcasters pay to be a part of the system, and the company won’t take a portion of their subscription fees. One source said Spotify will allow podcasters to determine their own prices.

Earlier in the week, Apple  (AAPL) - Get Apple Inc. Report announced it would be launching a new podcast subscription service in May that would be ad-free and offer early access.  

In other Spotify news, last month it said it plans to buy Betty Labs, the company behind the audio social app Locker Room. Though terms weren't disclosed, a person familiar with the situation told Dow Jones that Betty Labs was valued at about $50 million.

In February, Spotify announced it’s planning to launch in 85 new markets, mostly developing countries in Asia, Africa, the Pacific and the Caribbean.

Also in February, Atlantic Equities cut its rating on Spotify to neutral from overweight, with a price target of $370. 

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