Oppenheimer Analyst Upgrades Spotify Despite Q2 Revenue Miss

Spotify's Q2 Performance and Analyst Outlook

• 📉 Spotify shares experienced a significant drop of 10%, trading at $629, following a Q2 revenue miss and lackluster guidance.
• 💡 Despite the current downturn, Jason Helfstein, head of internet research at Oppenheimer, upgraded Spotify shares to outperform with an $800 price target.

Rationale Behind the Upgrade

• 🎯 The upgrade was initiated when the stock was 14% off its highs, around $675, based on the belief that investors were already anticipating a weaker gross margin outlook and foreign exchange headwinds.
• ⚠️ Helfstein acknowledges that waiting to upgrade at a lower price point, like $630, would have been a wiser strategy in hindsight.
• 🚀 The long-term thesis for Spotify remains intact, even though the Q3 guidance of 10% organic revenue growth was lower than expected for a company that should ideally achieve 20% long-term revenue growth.