Spotify’s share price is down almost 40% in 2022 — but Morgan Stanley analysts see upside in the company’s ability to grow subscriptions and raise prices.
Members of Congress called Discovery Mode"troubling." Managers gushed about the boost it gave their acts.On Friday, Morgan Stanley lowered its price target for Spotify shares from $300 to $225 to reflect “higher interest rates and lower long-term gross margins,” analysts wrote in a note to investors. The analysts kept the “overweight” rating for Spotify, however, since the current $141.28 price suggests ample room for growth.
Morgan Stanley is “optimistic” on Spotify’s ability to “deliver strong user growth through innovation and product development” but “cautious” on its goal to achieve gross margins in the 30-40% range. The analysts believe Spotify has the ability to raise prices to improve average revenue per user and view Amazon Music’s recent price hikes “as constructive for the broader industry.
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