Spotify (SPOT) has been unofficially crowned the winner of the streaming music wars, besting much bigger brother mega-caps Apple Music and Amazon, as well as Sirius XM, and others. The stock is consolidating just below all-time highs and if Netflix’s move after earnings is any indication, I think SPOT should punch through to new all-time highs. I hold SPOT in the Tactical Alpha Growth (TAG) portfolio as well as the Active Opportunities portfolio. If we see strong third-quarter earnings on November 12, I will look to increase my holdings. I first wrote about SPOT in July as the stock was trading at $343. We’re currently trading at $386, just below the all-time highs of $387 set back in 2021. Looking at the weekly chart of SPOT on the approach of all-time highs looking at the trend channel (blue dashed lines) you’ll see the price is at the middle line of the channel, which I classify as neutral. Not oversold at the lower end of the channel or overbought at the upper end of the channel, but right in the middle ahead of a possible ‘upstream’ move to new highs. Turning to the daily chart we see a nice bull-flag pattern forming below the key $387 highs. All we’re waiting on is another rush of accumulation volume like we saw in April ’24 and Sept ’24 to punch us through to new all time highs. The earnings trajectory for this company has been insane: 2022 EPS ($3.09) 2023 EPS ($2.95) 2024 EPS +$6.37 2025 EPS +$9.06 (est.) The company went from losing almost 3 dollars a share in 2023 to making $6.37. The expectations for 2025 is another 40%-plus growth on the bottom line as the company continues to generate more free cash flow. Netflix could be a nice indication of what’s to come for SPOT as it’s in the same communications sector, the same entertainment industry, and the same movies & entertainment sub-industry group. Netflix beat expectations and broke to new all-time highs led by new subs, 50% of which are coming from an ad tier. SPOT is testing new add tiers and markets are likely to discount in additional cash flow as SPOT rolls out new membership levels. Spotify is also heavily embracing AI to optimize content recommendation to users much like Meta has for Instagram and Facebook, and we know what’s happening with that stock. Meta is also in the communication sector sitting close to new all-time highs like NFLX, so the trend for this group remains firmly higher. -Todd Gordon, Founder of Inside Edge Capital , LLC DISCLOSURES: (Gordon owns SPOT personally and in his wealth management company Inside Edge Capital. Charts shown are MotiveWave.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
