Investing.com – Spotify (NYSE:SPOT) fell Tuesday, joining in on the broader market selloff, but sentiment on the streaming music company has been lifted after a Wall Street bear upgraded his rating on the company.
Evercore analyst Kevin Rippey upgraded his rating on Spotify (NYSE:SPOT) to in line from underperform and maintained its $110 price target on the company, citing the nearly 30% decline since the August peak. Spotify fell more than 1% pressured by selling in the broader market after U.S. manufacturing stooped to a 10-year low. The S&P 500 and Dow were both down more than 1%.
Rippey said that while the path to substantial gross margin expansion for Spotify is unclear, the opportunity to short the company has diminished after the pullback.
The upgrade comes just a few weeks before the company is set to release its earnings report on Oct. 24 in which subscriber and monthly active user trends will be the key metrics, Evercore said.
During the second quarter, the company grew premium subscribers by 31% year over year to 108 million. Monthly active users were 232 million, up 29% year on year. Users streamed 17 billion hours of content during the quarter, which was up 35%, according to CEO Daniel Ek.
The uptick in user growth helped the company slash net losses to 76 million euros last quarter ($83 million), compared to a loss of 394 million euros a year earlier.
Spotify is down about 0.6% so far this year. It has an average price target of $149, according to consensus estimates from Investing.com.