Spotify Stock is Down 38% From All-Time High, But One Analyst Sees a 40% Upside

Spotify (NYSE: SPOT ) stock has dropped and underperformed the market since mid-last year.

It dropped from $784 and bottomed at $405.

Still, despite these losses, Bank of America (NYSE: BAC ) believes that the company may stage a strong comeback soon.

Bank of America is Bullish on Spotify Stock Spotify stock has been in a downward trend, a situation that worsened a few months ago when it published its quarterly earnings.

Its report showed that its revenue rose by 8% to $5.3 billion, while its monthly active users soared 12% to 761 million.

Despite its company publishing strong numbers, the stock retreated because its guidance was a bit soft, with management guiding to 6 million premium subscriber additions in the second quarter.

Analysts were expecting the real premium subscribers to be 300.4 million.

In a note, a Bank of America analyst predicted that the company was well positioned to grow this year.

Jessica Reif Ehrlich, the analyst, added that Spotify has: "laid out an impressive compelling product roadmap and attractive financial targets, and now the focus will turn to execution.

We now see even greater clarity for continued profit and [free cash flow] growth including price increases, new tiers and further penetration of incremental services including podcasting, audiobooks and fitness." Other top analysts tracking the company believe that its stock has more upside ahead.

Cantor Fitzgerald boosted the target to $520 from the previous $430.

Doug Anmuth, a JPMorgan analyst, hiked his target from $600 to $650, while Wells Fargo hiked to $600 from $580.

As a result, according to, the consensus target for the SPOT stock is $678, also up by 40% from the current level.

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It has beaten other popular brands in the streaming industry, including those by companies like Apple, Amazon, and Google.

Analysts expect that its annual revenue will grow by 13.25% this year to $22.37 billion, followed by 14.2% next year to $25 billion.

The company has also been expanding its margins.

Its recent earnings showed that its net income margin rose to 15.46%.

Still, the company has also come under pressure following its launch of AI-generated remixes and song covers.

It introduced the feature in a partnership with Universal Music Group, the biggest music label company in the world.

The next key catalyst for Spotify stock will be its earnings, which will come out on August 4.

Analysts expect its revenue to rise by 14% in the second quarter.

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