Spotify Stock Downgraded Ahead Of Earnings

SPOT scored a record high yesterday

Managing Editor
Jul 25, 2018 at 9:25 AM
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Spotify Technology (NYSE:SPOT) stock is trading down 1.7% ahead of the open, after Pivotal Research Group downgraded the streaming name to "hold" from "buy." The brokerage firm cited concerns the stock is trading too near its SPOT price target of $200, and calling the consensus estimate for 2018 subscriber growth "too aggressive" ahead of the company's second-quarter earnings report, due before the open tomorrow, July 26. 

On the charts, Spotify stock scored a record high of $190.80 yesterday, before settling at $187.81. The shares have carved out a channel of higher highs since their direct listing back in April, guided higher by their ascending 30-day moving average, a trendline that, along with the newly formed 50-day trendline, contained a pullback earlier this month. Overall, SPOT has added nearly 42% since the New York Stock Exchange (NYSE) set a reference price of $132 per share on Monday, April 2. 

Following Spotify's first earnings report on May 3, the stock dropped 5.7%. This time around, the options market is pricing in an 11.9% post-earnings move, regardless of direction.

There is a distinct bullish bias in the analyst circle. Of the 18 brokerages covering SPOT, 12 rate it a "buy" or "strong buy," with only one "strong sell" on the books.

Options buyers have handily favored calls in the past 10 days. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 5,370 calls in the last 10 sessions, compared to just 2,620 puts.

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