In a report released today, Doug Creutz from TD Cowen reiterated a Hold rating on Spotify, with a price target of $484.00.
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Doug Creutz has given his Hold rating due to a combination of factors impacting Spotify’s financial performance. The company’s Q2 results were generally in line with expectations, but the guidance for Q3 was softer than anticipated due to slower growth in average revenue per user (ARPU). This prompted a revision of estimates, considering significant foreign exchange headwinds and lower ARPU projections for the remainder of the year.
Despite raising the price target from $457 to $484, mainly due to dollar weakness, Creutz maintained a Hold rating. The Q2 revenue, although showing year-over-year growth, fell short of estimates due to currency fluctuations. While there was an improvement in gross margins and a slight increase in monthly active users and premium subscribers, challenges such as pricing softness in advertising revenue and slower-than-expected progress in the advertising business contributed to the cautious outlook.