Spotify stock has dropped significantly from its all-time high, underperforming the market since mid-last year. The stock fell from $784 to a bottom of $405, representing a 38% decline. Despite these losses, Bank of America believes the company is well positioned for a strong comeback, driven by a compelling product roadmap and attractive financial targets.

Analysts raise price targets

Bank of America analyst Jessica Reif Ehrlich highlighted Spotify's potential for continued profit and free cash flow growth. She cited price increases, new tiers, and further penetration of incremental services such as podcasting, audiobooks, and fitness as key drivers. Other analysts have also turned bullish on the stock:

The consensus target for Spotify stock is now $678, up 40% from current levels.

Strong quarterly performance

Spotify's recent quarterly earnings showed revenue rose 8% to $5.3 billion, while monthly active users soared 12% to 761 million. Despite these strong numbers, the stock retreated due to soft guidance, with management projecting 6 million premium subscriber additions in the second quarter. Analysts had expected premium subscribers to reach 300.4 million.

Growth catalysts and upcoming earnings

Analysts expect Spotify's annual revenue to grow 13.25% this year to $22.37 billion, followed by 14.2% growth next year to $25 billion. The company's net income margin rose to 15.46% in its recent earnings, reflecting expanding margins. The next key catalyst for the stock will be its earnings report on August 4, with revenue expected to rise 14% in the second quarter.

Podcast host Joe Rogan alleged that former U.S. presidents were among those who contacted Spotify Technology SA during the height of the backlash against his podcast over COVID-19 discussions. Speaking on Wednesday’s episode of The Joe Rogan Experience with behavioral expert Chase Hughes, Rogan reflected on the controversy surrounding his pandemic-era commentary, stating the campaign against him extended far beyond public criticism.

Pressure campaign details

Discussing the fallout from his views on vaccines, lockdowns, and COVID-19 policies, Rogan said he faced organized efforts to damage both his show and business relationships. "They tried to crush my sponsors. They organized campaigns. There was PACs involved," Rogan said.

The comedian and podcast host then made a more striking claim about behind-the-scenes pressure on Spotify. "I can’t even talk about it. But there was presidents involved and former presidents involved that were contacting Spotify," Rogan said. "Trying to get me removed for vaccine misinformation."

Financial scale of efforts

According to Rogan, the efforts to remove him were extensive. "There was a lot of coordination," he said. "They spent a lot of money. A lot of money. It wasn’t a small amount of money. It wasn’t a small amount of people. It was a lot of people and a lot of money."

Rogan credited Spotify with resisting the pressure campaign, adding: "Thank God I was on Spotify."

Platform response and context

Rogan became the center of a national controversy in 2022 after critics accused him of spreading COVID-19 misinformation through guests and commentary on The Joe Rogan Experience. The dispute escalated when musician Neil Young removed his music from Spotify in protest, with several other artists following suit.

Spotify ultimately kept Rogan’s podcast on the platform while introducing COVID-19 content advisories and publishing additional platform rules.