Spotify Technology S.A. (NYSE:SPOT) is one of billionaire Steve Cohen’s large-cap stock picks with the highest upside potential. On April 29, Benchmark reiterated a Buy rating on Spotify Technology S.A. (NYSE:SPOT) but lowered the price target to $695 from $760.
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The price target cut comes amid concerns about the company’s cost structure. According to BTIG analyst Mark Zgutowicz, Spotify Technology management provided a cost bridge without a clear revenue projection.
In addition, the research firm is wary of the company’s advertising monetization lagging behind engagement growth. According to BTIG, Spotify has yet to provide an explanation for why ad monetization trails engagement beyond problematic pricing.
The lack of a clear commercial strategy for AI-generated music, including the rights and royalty structure, is another headwind that continues to weigh on BTIG’s sentiment toward the stock. The research firm is also concerned about the qualitative payback period for current AI and research spending.
Spotify Technology S.A. (NYSE:SPOT) operates the world’s most popular audio streaming subscription service, providing access to over 100 million tracks, 7 million podcasts, and 500,000 audiobooks. Using a freemium model, it offers ad-supported free listening or paid subscriptions for high-quality, offline access, utilizing AI-driven personalization (like the AI DJ) to connect users with audio content.
While we acknowledge the potential of SPOT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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