We came across a bullish thesis on Spotify Technology S.A. (SPOT) on Twitter by RadnorCapital. In this article, we will summarize the bulls’ thesis on SPOT. Spotify Technology S.A. (SPOT)’s share was trading at $482.52 as of Dec 9th. SPOT’s trailing and forward P/E were 138.96 and 51.28 respectively according to Yahoo Finance.
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Spotify (SPOT) is doubling down on its advertising ambitions with its Spotify Ad Exchange (SAX), a supply-side platform (SSP) that positions the company for significant growth in the programmatic advertising space. A partnership with Trade Desk (TTD), one of the leading demand-side platforms (DSPs), highlights Spotify’s strategic focus on scaling its advertising operations. Historically reliant on a direct salesforce and large brand deals, Spotify is now embracing self-serve ad campaigns via its Spotify Ad Studio, allowing advertisers to automate campaigns at scale. This shift, coupled with premium video ad offerings and enhanced measurement capabilities, positions Spotify as a compelling platform for small and medium-sized businesses (SMBs) seeking targeted, high-impact ad campaigns.
The integration of attribution partners will enhance Spotify’s appeal, enabling advertisers to better measure campaign effectiveness. However, programmatic ads introduce risks such as trust and safety issues, like mismatched ad placements, and the potential to degrade user experience through ad overload. These challenges, while inherent to the broader programmatic ecosystem, will require careful navigation by Spotify.
Trade Desk’s involvement is strategic, as advertisers increasingly demand consolidated platforms for managing campaigns across formats like connected TV (CTV), audio, and video. Spotify’s collaboration with TTD aligns with this trend, strengthening its position in the advertising ecosystem.
Near-term trends are promising, with Q4 ad spending expected to surge 30% year-over-year, driven by larger budgets from key clients and rapid growth among newer brands like Athletic Greens and Manscaped. While challenges remain, Spotify’s strategy signals a robust runway for incremental revenue growth.
Spotify Technology S.A. (SPOT) is on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 98 hedge fund portfolios held SPOT at the end of the third quarter which was 88 in the previous quarter. While we acknowledge the risk and potential of SPOT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SPOT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.