Spotify Earnings on Watch

As US Q3 earnings season rolls on, we have plenty of major names due to report this week. Among the big hitters, Spotify will be drawing plenty of attention tomorrow in the tech sector. The company’s stock has recovered sharply off the 2022 lows, posting a roughly 160% rally before correcting lower over the summer, in line with the broad moves we’ve seen across the tech sector. On the back of 5 consecutive quarters of earnings misses, traders will now be keen to see whether the group can get back in the green or if the trend of weaker earnings continued through the last quarter.

Improved Numbers Expected – Bullish Surprise Needed

On the numbers front, the market is looking for adjusted losses per share of -$0.235 on revenues of $3.515 billion. This would mark a slight uptick from the prior quarter’s results, on revenues, and a strong improvement in terms of EPS. Given the move lower from recent highs, it would likely take a strong upside surprise in earnings (a positive reading) to drive fresh buying for the stock. Traders will also be keen to see how the recent price increases have impacted Spotify’s customer base as well as getting the outlook for the current quarter. If numbers have improved, this should help drive the stock higher near-term while any dip in paying users will see Spotify stock heading lower.

Technical Views

Spotify

The correction lower has seen the stock trading back down to test the bull channel lows. With 161.81 holding just overhead as resistance, downside risks are growing here. If we do break below the channel, the focus will be on a test of the 129.56 level next, in line with bearish momentum studies readings.