Can Spotify Q2 Earnings Tune Out Bearish Signals For A Bullish Upside?

Spotify Technology SA SPOT will be reporting its second-quarter earnings on Tuesday. Wall Street expects $1.18 in EPS and $4.1 billion in revenues as the company reports before market hours.

The stock is up 79% over the past year, 55% YTD.

Let’s look at what the charts indicate for Spotify stock, and how the stock currently maps against Wall Street estimates.

Spotify Stock’s Strong Bearish Trend Ahead Of Q2 Earnings

Spotify’s stock is currently experiencing a strongly bearish trend, with the share price at $293.02 falling below its 5, 20, and 50-day exponential moving averages, which signal a bearish outlook.

Chart created using Benzinga Pro

The 8-day simple moving average (SMA) at $297.11, the 20-day SMA at $307.63, and the 50-day SMA at $307.37 all reinforce the bearish sentiment. However, the 200-day SMA at $242.76 provides a bullish counterpoint.

Chart created using Benzinga Pro

The Moving Average Convergence Divergence (MACD) indicator, at -4.40, suggests a bearish stance, while the Relative Strength Index (RSI) at 36.89 indicates that the stock is nearing oversold conditions. Despite the overall bearish trend, the Bollinger Bands indicate potential bullishness, with the 25-day range between $291.05 and $326.71, suggesting buying opportunities.

Spotify Analysts’ Consensus Rating & Focus Areas

Ratings & Consensus Estimates: The consensus analyst rating on Spotify stock stands at a Buy, with a price target of $311.87. Benchmark, Wolfe Research, and UBS recently issued their latest analyst ratings for Spotify stock in July. The average price target of $398.33 implies a 35.72% upside for the stock.

Benchmark analyst Mark Zgutowicz, has maintained a Buy rating on Spotify with a price target of $405. As Spotify reports its Q2 earnings, the focus will be on the impact of recent U.S. price increases across all plans (excluding student), with a particular interest in any related customer attrition and anticipated increases in average revenue per user (ARPU), says Zgutowicz.

Zgutowicz will be looking for updates on audiobook engagement, following substantial growth in the previous quarter. He expects further commentary on how this could influence pricing tiers. Concerns about gross margins, particularly regarding ongoing litigation related to bundled subscriptions with audiobooks and its potential impact on royalty payments to songwriters and publishers, could also be a focal point.

SPOT Price Action: Spotify stock was trading 0.49% lower at $293.84 at the time of publication Monday.

Read Next: