Is Spotify stock a ‘buy’ after the Q2 report this morning?

Spotify Technology SA (NYSE: SPOT) reported a wider-than-expected loss for its fiscal second quarter on Wednesday. Still, LightShed Partners’ Rich Greenfield says the stock is worth owning here.

The bull case for the Spotify stock

Spotify saw its quarterly ad revenue grow 17% (organically) that, as per Greenfield, is a huge positive ahead of a possible recession. This morning on CNBC’s “Squawk Box”, he said:

They’re growing faster than peers. Of companies that’ve reported so far, Spotify stands out. I’d own it here. It’s the most interesting name people have completely written off. But it’s a stock that has very little competition; they dominate the category.

His constructive view is in line with Wall Street that also has a consensus “overweight” rating on the Spotify stock that’s up roughly 15% on Wednesday.

Highlights of Spotify Q2 report

Lost €125 million (£105.16 million) versus the year-ago figure of €20 million
Per-share loss of €0.85 was significantly wider than last year’s €0.20
Revenue jumped 22.9% YoY to €2.86 billion as per the earnings press release
FactSet consensus was for €0.68 of per-share loss on €2.81 billion in revenue
433 million MAUs (up 18.6%) were more than 428.2 million expected
Premium subscribers climbed 13.9% year-over-year to 188 million

Other notable figures and future outlook

Other notable figures in Spotify’s Q2 report include a 29.5% increase in cost of sales, as gross margin slipped from 28.4% to 24.6%. The NYSE-listed firm now sees 450 million MAUs by the end of the current fiscal quarter – ahead of the analysts’ call for 443.9 million.

Despite the rally after the stock market news this morning, Spotify stock is still down more than 50% versus the start of 2022.

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