Spotify Stock Rises as Analyst Sings Praises

Options bulls are responding in turn

Deputy Editor
Sep 7, 2021 at 10:42 AM
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Spotify Technology SA (NYSE:SPOT) is up 4.2% at $259.60 at last check, following an upgrade from KeyBanc to "overweight" from "sector weight." The analyst noted promising industry trends as the platform's monthly active users (MAU) regains steady growth upwards. The brokerage also added that Spotify looks to be surpassing its top competitor Alphabet's (GOOGL) YouTube Premium. 

Still, there is room for more upgrades. Of the 16 in coverage, six said "hold," coming into today. The 12-month consensus price target, of $312.11, meanwhile, is a 20.2% premium to current levels. 

An unwinding of pessimism in the options pits could also put wind at SPOT's back. The equity sports a Schaeffer's put/call open interest ratio (SOIR) of 1.03, which stands higher than 69% of readings from the past year. In other words, short-term options traders have been more put-biased than usual. 

This shift may already be taking place. So far, 13,000 calls have crossed the tape -- four times the intraday average, compared to 1,692 puts. The weekly 9/10 265-strike call is the most popular, followed by the 270-strike call in the same series, with positions being opened at the former. 

The stock is trading at its highest level since mid-July, and just toppled pressure at the 140-day moving average for the first time in over four months. Despite the moves higher, SPOT is still down 17.4% this year. 

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