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Here's Why Spotify (SPOT) Gained But Lagged the Market Today

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Spotify (SPOT - Free Report) ended the recent trading session at $400.68, demonstrating a +0.21% swing from the preceding day's closing price. This move lagged the S&P 500's daily gain of 0.38%. Elsewhere, the Dow saw an upswing of 0.59%, while the tech-heavy Nasdaq appreciated by 0.09%.

Prior to today's trading, shares of the music-streaming service operator had gained 5.78% over the past month. This has lagged the Business Services sector's gain of 11.43% and outpaced the S&P 500's gain of 4.9% in that time.

Analysts and investors alike will be keeping a close eye on the performance of Spotify in its upcoming earnings disclosure. The company's earnings report is set to go public on November 12, 2024. The company's earnings per share (EPS) are projected to be $1.74, reflecting a 383.33% increase from the same quarter last year. Our most recent consensus estimate is calling for quarterly revenue of $4.37 billion, up 19.52% from the year-ago period.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $6.19 per share and revenue of $17.07 billion, indicating changes of +309.83% and +19.14%, respectively, compared to the previous year.

Investors should also pay attention to any latest changes in analyst estimates for Spotify. These recent revisions tend to reflect the evolving nature of short-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.71% lower. Spotify is holding a Zacks Rank of #3 (Hold) right now.

In the context of valuation, Spotify is at present trading with a Forward P/E ratio of 64.57. This represents a premium compared to its industry's average Forward P/E of 26.78.

The Technology Services industry is part of the Business Services sector. This group has a Zacks Industry Rank of 72, putting it in the top 29% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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