Cantor Fitzgerald’s Top Internet Stocks: Best Stocks To Buy According To $13.2 Billion Firm

13. Spotify Technology S.A. (NYSE:SPOT)

Number of Hedge Fund Holders In Q2 2024: 88

Share Price Target Upside: 1%

Cantor’s Rating: Neutral

Cantor’s Share Price Target: $340

Spotify Technology S.A. (NYSE:SPOT) is one of the largest audio streaming companies in the world, which benefits from its early mover advantage in the industry that has blossomed with the growth in global internet use. This has allowed the firm to grow its net and premium users by 113 million and 31 million, respectively, in 2023. This makes Spotify Technology S.A. (NYSE:SPOT) a rapidly growing company, and it underscores the fact that consumers are willing to spend on its products despite the inflationary trends that we’ve experienced over the past couple of years. Spotify Technology S.A. (NYSE:SPOT)’s stature in the market is further bolstered by the fact that it holds a 32% market share of the global music streaming market. This makes it the go to platform of choice of artists, and on the revenue front, Spotify Technology S.A. (NYSE:SPOT) has grown its revenue from 2021’s €9.6 billion to €13.2 billion in 2023. Consequently, its stable business position, also evidenced by 600 million monthly active users means that Spotify Technology S.A. (NYSE:SPOT) has to simply maintain its user base, grow its paid users, and improve margins to generate a profit.

Baron Funds mentioned Spotify Technology S.A. (NYSE:SPOT) in its Q2 2024 investor letter. Here is what the firm said:

“Spotify Technology S.A. (NYSE:SPOT) is a leading global digital music service, offering on-demand audio streaming through paid premium subscriptions and an ad-supported model. Shares of Spotify were up, largely attributable to impressive beats in gross margin and operating margin as well as the announcement of subscription price hikes. Given the strong value proposition of the product, Spotify is beginning to exercise its pricing power following last year’s initial price increases that saw minimal churn. Users continue to grow at a healthy pace despite the pricing impact. Spotify also continues to innovate on the product side, with early trials of generative AI features and the addition of new verticals like audiobooks, which have seen solid early adoption. On the cost side, Spotify is on a path to structurally increase gross margins, aided by its high-margin artist promotions marketplace, increasing contribution by its podcast division, and growth of the margin-accretive advertising business. We still view Spotify as a long term winner in music streaming with potential to reach more than one billion monthly active users.”