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.
Technical Analysis:
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.
Summary:
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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