Spotify Stock (NYSE: SPOT) Hits All-Time Low — Is Now the Time to Buy?

spotify stock
  • Save

Spotify stock (NYSE: SPOT) just recently touched a record low of $88.69 per share, and some are discussing whether it’s a good time to invest in the audio-entertainment company, which was trading for nearly three times as much at 2022’s start.

Spotify shares’ all-time-low price arrived only days after the Stockholm-based business announced the formal rollout of audiobooks in the U.S. – and a little over a week following a rather positive assessment of SPOT’s long-term potential from Evercore.

(Of course, turbulence throughout the broader market is likewise causing a number of other stocks in and around the tech sector to part with a substantial portion of their value.)

“And then they’re finally moving off the heavy investment phase that they’ve been putting into podcasting,” Evercore senior managing director Mark Mahaney said of his vision for Spotify stock. “All of that comes together I think starting next year with gross margin expansion. And then they’ve had this user acceleration this year that I think can convert into paid-sub acceleration next year or strong growth next year. I think you want to be long Spotify before that happens, and that’s now.”

Meanwhile, Amsterdam-headquartered investment management firm The Guardian Fund, which in early 2021 predicted that SPOT could crack a staggering $1,750 by 2030, remains confident in the outlook of Spotify stock despite 2022’s valuation falloff.

“Spotify is one of the cheapest high-quality companies we know. During every major drawdown, there is the yin & yang where the contrary forces of the crashing price and the rising expected return interrelate. While we’re at it we would welcome even lower prices. Why doesn’t the market sell us the shares for USD 50/share? Or for USD 25?” the 12-year-old firm wrote in July, proceeding to disclose that it had increased its Spotify stock position (from 14.2 percent to 15.2 percent of the portfolio) during H1 2022.

“In essence, our investment case is that audio content is hugely under-monetized compared to video content,” The Guardian Fund specified. “Audio is one of the last blue oceans out there and the technology to unlock more value did not exist until recently. Spotify is well-positioned to close that gap.”

Additionally, it’s worth noting that Morgan Stanley in late July lowered its SPOT target price from $170 to $140 (with an overweight rating), whereas KeyCorp reduced its own SPOT target price from $210 to $146. Moreover, Marketbeat has pinpointed the average Spotify stock target price set by investors in published analyses during the past year as $183.42.

Notwithstanding these and other optimistic views of SPOT – into which CEO Daniel Ek in May invested $50 million, when shares hit what was then a record low – certain financial professionals are offering comparatively critical assessments of Spotify stock and cashing out of their holdings.  

To be sure, Ark Invest founder and CEO Cathie Wood’s various ETFs have offloaded millions of dollars’ worth of Spotify stock to this point in 2022, including 20,000 shares towards September’s beginning.

At the time of this piece’s writing, Spotify stock had improved slightly from Friday’s close and was trading for $89.99 per share. Besides the aforementioned expansion into audiobooks, Spotify has dropped billions on podcasting, and reports have relayed that the company is overtaking deeply entrenched players in the space.

Furthermore, CFO Paul Vogel believes that profitability is on the horizon for podcasting. Spotify – which has also branched out into ticketing and interactive appsreported having 433 million users and 188 million premium subscribers as of Q2 2022’s end. The latter figure represents a 14 percent year-over-year increase.