Spotify cuts labour force for third time this year to control costs. Its stock is seeing results

Comment

Spotify (SPOT.us) will lay off 17% of its workforce to cut costs. About 1,500 workers are affected, with this being the third round of layoffs for the year. This will considerably lower the spend on salaries and other employee associated costs.

The market greeted the news with enthusiasm and Spotify's shares gapped up on yesterday's open, with SPOT.us closing up near 7.5% on the day. Investors see the chances of the company posting a profit next year as improving. I.e. it may mark a significant milestone, as it would be the first instance since the company's initial public offering in 2018.

Since its public debut, Spotify has prioritised expansion, at the cost of profitability. Despite this, the streaming platform, which allocates a significant portion of subscription revenue to labels and music rights-holders, has yet to meet its profitability targets. The tide may turn as it trims expenses and contemplates passing more costs to users. In the US, the company has raised its prices on individual streaming plans for the first time in over 10 years.

Wall Street anticipates an EPS of $1.54 for 2024.

Technical Analysis


Source: www.tradingview.com

Trade the News: View our Economic Calendar

From August 2020 running into the end of 2021 Spotify showed signs of a distribution pattern. SPOT.us then moved into a mark-down phase which saw its share price decline markedly. However, it spent move of 2022 charting an accumulation pattern. SPOT.us now finds itself in a mark-up phase. It is above its black 30-week EMA and the EMA has bullishly turned up.

SPOT.us has had a remarkable year on the share market and is up around 137% year-to-date.

Image by Sammy-Sander from Pixabay

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure
*

When executing customers' trades, FXCM can be compensated in several ways, which include, but are not limited to: spreads, charging commissions at the open and close of a trade, and adding a mark-up to rollover, etc. Commission-based pricing is applicable to Active Trader account types.

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.