Swedish audio streaming and famous media services provider Spotify (NYSE: SPOT) delivered mixed results in their latest earnings release. Still, investors would have been pleased to see the streaming giant’s share price surge against higher-than-expected growth in monthly active users.
Despite a larger-than-expected €1.40 loss per share coming in against expectations of a €1.29 loss per share, Spotify saw its share price rally in pre-market trading on Tuesday morning, 31st of January. An 8.1% miss in expected loss per share and a further 58.3% miss in expected free cash flow would have concerned many market participants. Still, promising results in user growth prevailed to be the primary reason behind Spotify’s impressive rally. Closing at $100 at market close on Monday, 30th of January, the streaming giant’s share price gapped higher to open at $109.37 on Tuesday and to close at $112.72. Market sentiment turned positive as Spotify reported 489 million monthly active users for its fourth quarter, beating expectations of 477 million and up by 20% year-over-year. Moreover, the famous music streaming and media services provider expect monthly active users to reach 500 million by the end of its first quarter of 2023.
The price action saw Spotify (NYSE: SPOT) gap higher to open at $109.37 on Tuesday morning, up by 9.37% from the previous day’s close. Positive market sentiment could favour the bulls and see the price action continue to rise to the $127.44 resistance level (higher white dotted line). If positive market sentiment prevails and Spotify continues to see its share price surge, the bulls could see the price action rise to the $160.45 resistance level (green line).
The bears could see the price action fall towards the $88.00 support zone (lower white dotted line) before rising again. Alternatively, suppose market sentiment turns negative against announced plans to “cut 6% of Spotify’s global workforce”. In that case, we could see the price action fall towards the major support level at $68.97 (red line) before rebounding.
As the US recession looms and Spotify plans to reduce its global workforce, the possibility exists for a price retracement to the $88.00 and $68.97 support levels. On the other hand, the bulls could see the price action rise towards the $127.44 resistance level. If surpassed, we could see the price rise higher towards the $160.45 resistance level, captivating the attention of potential short sellers.
Sources: CNBC, Trading View, The Motley Fool, KoyFin, Spotify Quarterly Results
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