Spotify shares rallied more than 12% on Tuesday, breaking above the $600.00 price level for the first time ever.
The bullish surge in prices came on the heel of this morning's earnings report for the company. While earnings per share came in lower than expected, the company’s report showed that it had returned to profitability.
In 2023, followed by its management shifted its focus from aggressive growth of subscribers to a more efficient operating style. The move came as shares suffered from the company’s fundamental operating results.
The shift in focus has paid off handsomely for Spotify investors, as shares are now trading more than 400% higher.
Today's earnings report showed a 16% drop in operating expenses, while there was an 11% jump in premium subscribers of their services.
Wall Street analysts have improved their view of Spotify over the last year, with 17 analysts recommending the stock as a strong buy. That said, 12 analyst of the total of 35 consider the stock a “hold” or “sell”. That sentiment leaves room for upgrades in the future.
Shares of Spotify had found round numbered resistance at the $500 level in November, December and January. The stock broke that resistance in mid-January to rally to $550, where it sat the three days prior to today's earnings release.
Today's significant rally above is likely to be met with some profit taking that will result in a short-term consolidation at $600.
Investors should expect short-term support from $600.00 and the $580 price level ahead of another 10% to 15% increase in prices over the next three to six months.
Spotify shares remain in a bullish trend, with the price target of $700.