By raising prices and cutting costs, Spotify has transformed into the kind of profitable company investors always hoped it could become, and the streamer’s upbeat second-quarter earnings on Tuesday (July 23) led its share price to jump 9.1% to $321.87 this week.
After Spotify announced it grew revenues by 20%, improved its gross margin and beat guidance on new subscriber additions, a slew of analysts raised their price targets, including Goldman Sachs (from $320 to $425), JP Morgan (from $375 to $425), Rosenblatt (from $396 to $399), Pivotal Research (from $400 to $460), Barclays (from $350 to $360), Cowen (from $273 to $356) and B of A Securities (from $380 to $430). Universal Music Group (UMG), the other music company that released earnings this week , had the opposite reaction from investors when its second-quarter subscription revenue fell far short of analysts’ expectations, leading its share price to drop 24.1% to 21.
34 euros ($23.17). But it wasn’t all bad news: Overall revenue at the music giant grew 8.
7% to 2.93 billion euros ($3.16 billion) and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 17.
4% to 580 million euros ($624 million). But investors focused on UMG’s streaming numbers above all else. The recorded music division’s subscription revenue grew 6.
9%, down from 12.5% in the prior-year quarter, while overall streaming revenue grew 4.1% compared to 11% a year earlier.
A number of analysts lowered their UMG price t.