Spotify (NYSE: SPOT) stock price plunged sharply since the beginning of this month as investors have started showing concerns over future growth prospects. The drop in podcast advertising revenue along with easing social distancing policies negatively impacted investor’s sentiments.
However, the stock price bounced back on Thursday after the report hinted that podcast advertising returned to the normal level.
Westwood One and podcast measurement company Magellan AI reported that the top 400 U.S. podcasts have experienced 666 unique advertisers in June. This is flat compared to the year-ago period but jumped from January number of 563. The report also shows that ads per podcast recovered in June.
The report says podcast ad market stood around $708 million last year, with an expected growth of 15% in 2020 and 55% growth in the next year.
Spotify stock also received support from a price target upgrade from Credit Suisse. The firm has provided a price target of $315, representing a significant upside from the current level of $244.
Spotify stock price soared almost 60% since the beginning of this year and the shares of the streaming and podcast company grew 80% in the past twelve months.
The shares of the streaming company were under pressure since it announced lower than expected results for the second quarter. Its revenue of €1.89 billion grew 13.2% from the past year period but missed the consensus estimate by €40M. The loss per share was also wider than expectations.
Moreover, the company has provided soft guidance for the second half of the year. It expects third-quarter revenue to hit €1.85 billion to €2.05 billion range compared to the consensus of €2.01B. The fourth-quarter revenue is likely to stand around €2.05 to $2.25 billion. The consensus revenue estimate is €2.18 billion.
“We believe the improved momentum we saw in the back half of the quarter has continued into Q3 and we expect to hit our full-year targets,” Spotify’s management said.