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.
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.
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.