Shares of Spotify Technology (SPOT) surged 13% to $489.93 on Thursday, snapping a two-day losing streak after the music streaming giant issued ambitious long-term growth targets and announced several new features for its premium subscribers.
"We expect a compounded annual growth rate in the mid-teens percentages for revenue through 2030, with gross margin between 35% and 40%," Co-CEOs Gustav Soderstrom and Alex Norstrom announced at the company's investor day event. They added that operating margin is expected to be above 20% through 2030, with "strong growth" in free cash flow.
The bullish forecast signals a clear path to enhanced profitability, a key focus for investors. Alongside the financial targets, Spotify announced an agreement with Universal Music Group (UNVGY) to launch a new artificial-intelligence tool allowing users to create covers and remixes of songs. This feature will be a paid add-on for premium users. Another new feature, "Reserved," will hold two live concert tickets for top fans of select artists.
These initiatives are part of Spotify's broader goal to reach one billion subscribers and €100 billion in revenue. The announcements come after a first quarter where subscriber growth underperformed Wall Street expectations, adding pressure on the company to diversify its revenue streams. For the current quarter, Spotify expects to add 6 million premium subscribers, bringing the total to 299 million. Despite Thursday's rally, the stock remains down about 16% year-to-date.
This article is for informational purposes only and does not constitute investment advice.
