SPOT Stock Remains Lackluster Despite Broader Market Gains

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Spotify faces some growing pains, leading to lackluster stock despite more impressive overall market gains.

Spotify stock (NYSE: SPOT) is underperforming in October, down 7.6% month-to-date, despite traditionally having been a major gainer during market upsurges. While the drop is nothing drastic, the bigger concern for Spotify is that Wall Street has certainly taken notice.

Between a recent downgrade by Goldman Sachs—traditionally very bullish on SPOT—and Citi maintaining a recent ‘Hold’ rating on the stock, the immediate future for Spotify stock is up in the air.

The timing of the changes comes not-so-coincidentally as founder and CEO Daniel Ek steps away from his role at the company, leading to broader executive suite shuffling. This, of course, comes amid backlash from artists and users over Ek’s (and others’) investments in military AI technology.

Ultimately, all of these issues could be a factor in SPOT’s lackluster status. Still, the broader analyst industry remains optimistic about the stock in the long-term, essentially chalking up the current status as little more than so-called growing pains. Upward revisions in overall estimates show analysts’ positivity toward the business’ operations and its ability to generate profit, according to the Nasdaq.

But another issue plaguing Spotify in the short-term could be in the form of the veritable stampede of AI-based stocks, which analysts say carry more upsides than the streaming giant and its ilk, with fewer downsides. Last week, shares of SPOT had lost 5.44% behind the Computer and Technology sector’s gain of 1.2%.

Market participants will be closely watching the financial results of Spotify and the ebb and flow of its stock. The company is set to release its earnings on November 4, with an expected EPS of $1.85, up 16.35% from the prior-year quarter. Estimated revenue projects net sales of $4.89 billion, up 11.62% from the previous year.

Meanwhile, for the full-year estimate, analysts are expecting earnings of $5.46 per share and revenue of $19.9 billion, marking changes of -8.24% and +17.38%, respectively.