Joe TerranovaSpotify TechnologySPOTWATCHNov 11, 2024

(For the viewers, these Past Top Picks might be a good time to go and get yourself a sandwich ;)  

At the time, felt that the hardware foundation for the AI stack was going to mature, and the next layer had to be the software that would enable the end-user applications to use AI computing. Fantastic company, but it became clear that the Anthropics of the world would be too much of a headwind.

It reports tomorrow. It's a falling knife and has broken momentum. Who knows? The founding CEO left and the company has never recovered.

Sold it. He ran out of patience for it. SPOT has been in a downtrend since end of June.

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.

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.

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

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.

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.

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

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

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.

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.

Bought it 6 years ago. Great product line, the king of music streaming.

Last week, a few analysts upgraded it. It has pricing power, because it's had no price increases, except one last year from $10 to $11 monthly vs. Netflix by 41% since 2018 and other apps. Also, Spotify earns outside of music including audiobooks and podcasting.