Spotify stock price could drop to $387 as insiders sell

Spotify stock price has had a great year as it jumped by over 140% in 2024, bringing its market cap to over $92 billion. SPOT, a leading streaming company, has soared by 563% from its lowest point in 2023. So, does the stock have more upside as some top insiders sell?

Spotify insiders are selling the stock

Recent data shows that some senior Spotify shareholders are selling the stock to take advantage of the ongoing surge. According to Barchart, these insiders have sold 1.6 million shares in the last three months and 3.4 million in the last 12 months. At the current price, these shares are worth over $1.5 billion. 

Some of the top shareholders selling the Spotify stock are Daniel Ek, the founder and CEO, Barry Mccarthy, Gustav Soderstrom, and Dustee Jenkins. Soderstrom is the company’s chief product and technology officer, while Jenkins is the head of public relations.

Ted Sarandos, the head of Netflix and a board member, has also unloaded shares worth over $6 million. 

Insider sales are often seen as red flags since these officials know more about a company’s performance than ordinary investors. However, some of these sales are usually part of an insider’s long-term planning. 

Read more: Spotify stock still has 30% upside: Wolfe Research

SPOT business is thriving

Spotify’s stock price has jumped as the company continues to gain market share in the music streaming industry. This is notable since it competes with companies that have an ecosystem advantage. Apple Music comes pre-installed in Apple devices, while YouTube Music is part of Google’s ecosystem. 

Spotify’s business has continued to add more customers in the past few years, even as the company has gradually boosted its prices. It ended the last quarter with 640 million monthly active users, up from 574 million in the same period last year.

The MAU is an important metric for Spotify because of how it makes money. Free users give its business revenue through advertisements. At the same time, many free users ultimately subscribe to its premium package to remove the advertisements, which can be a nuisance. 

Spotify’s ad business brought in over $472 million in revenues in the last quarter, up from $447 million in the same period last year.

The company’s premium subscribers have continued rising. It had over 252 million subscribers, a 12% annual increase from the same period last year. This growth increased its premium revenue by 21% to $3.51 billion. 

Spotify has also grown its margins by increasing premium costs and by reducing its costs through layoffs. It laid off about 17% of its workers earlier this year. At the same time, there are signs that its podcast bet is paying off.

Analysts are optimistic that Spotify’s business will continue to do well this year. The average estimate for the current quarter’s revenue is $4.14 billion, a 12.83% annual increase. Analysts also expect its annual revenue to get to $15.5 billion this year, followed by $17.8 billion in the next financial year. 

Spotify stock price analysis

The weekly chart shows that the SPOT share price has been in a strong uptrend in the past few months. It has flipped the important resistance level at $387.68, the upper side of the cup and handle chart pattern. A C&H is a highly popular bullish sign in the market. 

The Relative Strength Index (RSI) has moved to the overbought level. Therefore, the stock will likely go through a reset, which will see it drop to the support at $387. This pattern is known as a break and retest, a popular bullish sign. Therefore, the long-term view for the stock is bullish, with the target being at $600.

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