Avid Photographer. Travel the world to capture moments and beautiful photos. Sony Alpha User/iStock Editorial via Getty Images Spotify ( NYSE: SPOT ) has had a banner year this year.
The leading streaming company has seen its share price surge 70%, and the stock is now well on its way to reclaiming its pandemic-era highs. The backbone behind this rally, of course, is the company's price increases. Spotify has taken advantage of the ultra-inflationary environment and banking on the fact that its subscriber base is loyal to boost prices several times across markets.
This has driven revenue growth well in excess of Premium subscriber/MAU growth, pulling its share price up with it. But the question for investors now is: how much steam is there in this rally? Data by YCharts I had been bullish on Spotify until earlier this year , when I downgraded Spotify to neutral in February. While I acknowledge that my call may have been a bit early, I certainly think there is more downside than upside after the massive YTD rally.
I'm reiterating my neutral call and am encouraging investors to take caution here, locking in any YTD gains that you have. Broadly, I'm concerned about two major risks: Spotify's latest pricing moves may alienate its user base, especially as it is now slightly more expensive than its competition Slower user growth. The company has relied more and more on promotional windows (like Q4's "Wrapped" campaign to bring in the bulk of its new subscribers, whereas non-promoti.
