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Spotify (SPOT) Stock Sinks As Market Gains: Here's Why

In the latest market close, Spotify (SPOT) reached $311.22, with a -0.58% movement compared to the previous day. This change lagged the S&P 500's daily gain of 0.77%. Meanwhile, the Dow experienced a rise of 0.49%, and the technology-dominated Nasdaq saw an increase of 0.95%.

The the stock of music-streaming service operator has risen by 3.37% in the past month, leading the Business Services sector's loss of 0.77% and undershooting the S&P 500's gain of 3.71%.

The investment community will be paying close attention to the earnings performance of Spotify in its upcoming release. The company's earnings per share (EPS) are projected to be $1.12, reflecting a 166.27% increase from the same quarter last year. In the meantime, our current consensus estimate forecasts the revenue to be $4.1 billion, indicating a 18.5% growth compared to the corresponding quarter of the prior year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $4.95 per share and revenue of $16.81 billion, indicating changes of +267.8% and +17.32%, respectively, compared to the previous year.

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Investors should also take note of any recent adjustments to analyst estimates for Spotify. Such recent modifications usually signify the changing landscape of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.46% higher. At present, Spotify boasts a Zacks Rank of #1 (Strong Buy).

With respect to valuation, Spotify is currently being traded at a Forward P/E ratio of 63.2. This valuation marks a premium compared to its industry's average Forward P/E of 21.66.

The Technology Services industry is part of the Business Services sector. Currently, this industry holds a Zacks Industry Rank of 65, positioning it in the top 26% of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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Spotify Technology (SPOT) : Free Stock Analysis Report

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