Jim Cramer - Mad Money Spotify Technology SPOT-N BUY Jul 15, 2024

It reports this week. But it's making new highs today at a high PE. The bar is set high, delivering 19% revenue growth the last two quarters so the next figure must be higher. Free cash flow is building too and that needs to rise too.

Price increases will increase margins and revenue, keep an eye out for any subscriber churn. Recently reported that margins expanded considerably. Valuation too rich. Not a horrible idea to take some profits. Great product and competitive moat.

Very rich, 12-month price target of $475. What jumps out for him is the management. Lots of competition, but management has executed extremely well. SONO is a bit cheaper, or even Pandora or Deezer.

One of the stocks that took off this year, because investors love companies based on a subscription model and recurring revenues.

It reports Tuesday. Is a standard beat-and-raise story, tending to blow away estimates. 

Spotify recently tested its 50-day moving average, then rebounded. A momentum indicator--MACD--just made a bullish crossover. It has started building a base and is going higher. The Chaikin Money Flow (CMF) remains positive. It just broke a ceiling of resistance on healthy volumes. Lang says this could hit $700.

They lead in audio. The chart shows tremendous momentum. Profits are driven by premium pricing, ad growth and lower podcast costs. They are getting into ad-supported revenues. He targets $892. Buy 3 tranches.

Valuation has kept her out. Early mover, but the space is going to get more competitive. 

More a trade than an investment. He bought in the last 6 weeks because it's really embraced AI -- similar to NFLX, allows you to customize your choices. 12-month price target of $749, so about $30 left.

Historically, a platform for music. Increasingly diversifying into podcasts and other types of formats. Great platform, great retention, improving monetization. Tiered approach (free, ads, premium) makes perfect sense. But it's over 40x free cashflow.

Would still own over a 10-year horizon, but more opportunities along the value chain in music labels.