Spotify's Investor Day Unveiled New Drivers of Future Growth and Profitability, Morgan Stanley Says
Spotify Technology (SPOT) introduced multiple new and meaningful drivers of growth and profitability at its investor day, showcasing its ability to capture incremental meaningful time spent, further revenue growth and drive towards 40% gross margins, Morgan Stanley said in a Friday note.The company announced a deal with Universal Music Group, allowing fans to create covers and remixes of their favorite songs, Morgan Stanley noted, adding that this opens up additional revenue streams for Spotify as well as for labels and artists, along with a new path to drive discovery.Spotify also announced a "Reserved by Spotify" feature that allows dedicated fans of an artist to have two concert tickets held just for them, which is further expected to differentiate the company's platform from the likes of other platforms, according to the note.The company has outlined an opportunity to grow to 1 billion monthly active users by 2030, which will contribute to a mid-teens revenue compound annual growth rate, and 35% to 40% gross margins with 20% and above earnings before interest and taxes margins over that time frame, Morgan Stanley said.Morgan Stanley raised its price target on the company's stock to $610 from $590 and maintained its overweight rating.Price: $529.97, Change: $+40.04, Percent Change: +8.17%
