Last February, Spotify (SPOT) introduced its AI DJ, offering fans a fresh approach to customizing the artificial intelligence-driven music experience. Recently, Spotify stock has secured a position on the IBD Leaderboard as the music streaming platform gears up for a new breakout.
On Thursday, Spotify transitioned from the IBD Leaderboard watchlist to join Meta Platforms (META), Nvidia (NVDA), and Uber Technologies (UBER) — all trailblazers in their respective fields.
Although profitability has been a challenge for the music service, Spotify stock excels in a crucial aspect related to demand: the up/down volume ratio. With a ratio of 1.9, Spotify leads the pack.
An up/down volume ratio exceeding 1.0 indicates demand, where Spotify surpasses Nvidia, Meta, and Uber with ratios of 1.6, 1.5, and 1.2, respectively.
Additionally, Spotify stock boasts a solid B+ Accumulation/Distribution Rating, reflecting institutional buying trends over the past 13 weeks. This rating matches Uber’s and surpasses Nvidia and Meta, both holding a B rating.
Spotify Introduces AI DJ and Collaborates with Delta
In a bid to personalize the music journey, Spotify unveiled its AI DJ last year. This AI-driven DJ acts as a personalized music curator, understanding each user’s unique music preferences to tailor the listening experience accordingly.
Apart from offering a handpicked selection of music, the AI DJ provides insights on recommended tracks and artists in a remarkably authentic voice.
Recently, Spotify partnered with Delta Air Lines (DAL) to announce “The Passport Sessions,” a new in-flight docuseries available for free. The inaugural episode, “From Miami to Medellín,” features songwriters Andy Clay and Maye traveling from Florida to Colombia to collaborate with urbano artists Juan Duque and Aria Vega.
Spotify Stock Shows Promise Amid Turnaround Efforts
Established in 2008, Spotify now grants listeners access to over 100 million tracks, 5 million podcasts, and 350,000 audiobooks. With a subscriber base of 226 million and a total user count of 574 million across 184 markets, its audio streaming service continues to thrive.
Following a surprising profit in the third quarter of the previous year, Spotify anticipates its fourth-quarter performance report scheduled for release on Feb. 6 before the market opens.
The company has witnessed sales growth acceleration for four consecutive quarters, reaching approximately $3.6 billion in Q3, marking a 19% increase year-over-year.
Analysts project a transition for Spotify from a loss of \(2.76 per share in 2023 to a profit of \)2.61 per share in 2024.
Despite the positive outlook, investors need to exercise caution due to the inherent risks associated with later-stage patterns, especially with an impending earnings report. The buy range for Spotify stock extends up to 213.02 after surpassing the 202.88 entry point in a third-stage flat base.
Meanwhile, Nvidia, Meta, and Uber continue to approach or flirt with record highs.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
