Your portfolios in brief
Founded in 2006, Spotify has established itself as a global company revolutionizing the way we consume music. With a presence in dozens of countries and a business model that has attracted over 236 million paying subscribers among its 602 million active users, Spotify continues to innovate in the audio entertainment space.
Highlights in 2023
Annual guidance: Spotify has taken significant steps towards profitability, a move marked by plans to increase prices in several key markets, including the US, UK, Australia, and Pakistan. These price increases are aimed at covering the costs of its audiobook service launched last year, adding a new dimension to its offering.
Sales and growth: The company continued to show impressive growth, with analysts forecasting sales of 3.87 billion USD for the quarter, up 18.6% year-on-year.
Why is this a stock to watch?
Spotify's initiatives to increase its prices, while maintaining solid growth in its paid subscriber base and exploring new territories with audiobooks, demonstrate its ability to innovate and adapt to market changes. What's more, with rising adjusted earnings forecasts and a performance that regularly exceeds Wall Street expectations, Spotify is positioned as a company with significant growth potential.
Analysts are generally optimistic about Spotify's future, citing its revenue diversification strategy and ability to raise prices without losing subscribers as key indicators of its financial health and growth potential. The market's positive reaction to the price increase announcements reflects confidence in the company's management.
Conclusion
Spotify's performance in 2023, including its ability to raise prices for the second time in a year in several key markets, including the U.S., and the introduction of a new basic subscription tier, justifies why it remains a stock to watch for any astute investor. Its shares are up 51% this year, compared with a 9.6% rise for the S&P 500, underlining Spotify's strength and growth potential in a competitive market. Spotify (SPOT) shares closed Thursday up 8.2% at $291.77. The rise came on impressive volume, with more shares traded than the session average. This compares with a 1% increase in the share price over the past four weeks.
Market Brief
Monday
Dow: Began the second quarter with a decline, losing 240.52 points, or 0.6%, to close at 39,566.85.
NASDAQ: edged up 0.11% to finish at 16,396.83 points.
S&P 500: Index down 0.20% to close at 5,243.77 points
Investors reacted cautiously to new inflation data and comments by Federal Reserve Chairman Jerome Powell, who emphasized the strength of economic growth and the labor market, while noting that inflation remained above target. This cautious stance is reflected in rising bond yields, with the 10-year rate reaching 4.319%, and is fuelling speculation about the timing of future rate cuts by the Fed.
Titles in brief
Micron Technology: The company's shares climbed 5.44% to $124.30, boosted by rumors of a megacenter project by Microsoft and OpenAI.
Microsoft: The company was also up 0.92%, reflecting optimism about its technology initiatives.
Home Depot: The company was down 4.06%, impacted by fears of inflation and its effects on costs and demand in the home improvement sector.
FedEx: The company fell 3.32% after announcing the non-renewal of its contract with USPS, raising questions about its future logistics strategies.
DJT: Donald Trump's media company plunged 21.47% following the publication of disappointing financial results for the year 2023.
Reaction to inflation data and Fed outlook
Investors reacted to new inflation data, in particular the Core PCE index, which showed an increase of 2.8% on an annual basis in February, in line with expectations. On a monthly basis, this index rose by 0.3%, according to the Commerce Department. These data reinforce investors' caution regarding the timing of rate cuts by the Fed.
First-quarter index performance
The main stock market indices closed the first quarter on a positive note. The S&P 500 jumped 10.2%, recording its best first-quarter performance since 2019, while the Dow Jones gained 5.6%. The NASDAQ also posted a significant rise of 9.1%. These quarterly and monthly gains brought the Dow closer to the symbolic 40,000-point mark, although Monday's decline took it further away from that level.
Tuesday
Dow: The Dow fell by a significant 1.00%, closing at 39,170.24 points.
NASDAQ: The index was also down, losing 0.95% to end at 16,240.45 points.
S&P 500: The broad index was not spared, dropping 0.72% to close at 5,205.81 points.
The session was marked by palpable nervousness on Wall Street, as investors reacted to a multitude of factors, from rising bond yields to rising oil prices and geopolitical tensions in the Middle East. Despite the unfavorable backdrop, indices managed to limit their losses, reflecting orderly consolidation rather than market panic.
- Stockss in brief
PVH Corp (-22.22%): The company behind Calvin Klein and Tommy Hilfiger saw its shares plunge after announcing forecasts well below expectations, reflecting a worrying trend in the retail sector.
UnitedHealth Group (-6.44%): The health insurer suffered a sharp decline, reacting negatively to the US government's setting of lower-than-expected Medicare Advantage rates, impacting industry margins.
Tesla (-4.97%): Shares plummeted following the release of disappointing first-quarter sales figures, attributed to shipping disruptions and an arson attack on the factory near Berlin.
UPS (+1.04%): The courier group benefited from the signing of a new subcontract with the US Postal Service (USPS), preferring UPS to rival FedEx (-1.73%).
GE Vernova (+3.85%): GE's renewable energy subsidiary made a remarkable debut on the New York Stock Exchange, symbolizing the end of GE's split into three separate entities.
Gold reaches new highs
Against a backdrop of increasing demand for safe-haven assets, gold reached all-time highs, surpassing $2260 an ounce, before climbing further to $2277.02. This spectacular rise, observed at the beginning of April 2024, reflects investors' concerns about rising geopolitical tensions and volatile bond yields. Expectations of a more accommodative monetary policy from the US Federal Reserve (Fed), despite persistent inflation, also played a key role in this dynamic. Statements by Fed Chairman Jerome Powell, suggesting a patient approach to interest rate cuts, reinforced the appeal of gold, traditionally seen as a safe haven in times of uncertainty. Conflicts in the Middle East and the war in Ukraine are also contributing to the gold rush, as investors seek protection against the risks of escalation and their potential repercussions on financial markets.
Wednesday
Dow: The Dow Jones edged down 0.11% to close at 39,127.14 points, marking its third consecutive day of decline.
NASDAQ: The index posted a modest gain of 0.23%, ending the day at 16,277.46 points.
S&P 500: The S&P 500 index edged up 0.11% to close at 5,211.49 points, benefiting from a declining inflation indicator that raised hopes of further interest rate cuts by the Fed.
The session was marked by a mixed performance from the major indices, against a backdrop of growing concerns about the trajectory of interest rate cuts by the Fed. Despite the challenges posed by interest rates and macroeconomic uncertainties, the market showed signs of resilience, buoyed by hopes of a more accommodative monetary policy and the performance of some major technology stocks. Market observers remain optimistic overall, anticipating a necessary consolidation after an exceptionally positive first quarter.
- Stockss in brief
Intel (-8.22%): The company suffered a sharp decline after revealing significant operating losses in its semiconductor manufacturing business, which weighed on the Dow Jones.
Disney (-3.13%): The stock suffered following the shareholders' meeting, where the candidates recommended by the directors were elected, marking a setback for activist investor Nelson Peltz.
Spotify (+8.23%): The sound-streaming platform saw its share price climb following reports of an imminent rate hike in several countries.
GE (+6.70%): The conglomerate, now refocused on aerospace, benefited from positive comments from analysts, highlighting the sector's higher margins.
Paramount Global (+14.97%): The stock jumped on reports that the company was in exclusive negotiations with Skydance Media for a possible tie-up.
Ulta Beauty (-15.34%): The cosmetics chain fell after its executives reported that the start of the year had been less good than hoped.
Thursday
Dow: The index fell by 1.35%, closing at 38,596.98 points.
NASDAQ: The index was down 1.40%, closing at 16,049.08 points.
S&P 500: The broad index lost 1.23%, closing at 5,147.21 points.
Indices fell significantly on Thursday in a volatile environment, as investors anticipated the March jobs report. With the release of March's key non-farm payrolls report imminent, investors are paying close attention to indications of the health of the US economy and the future direction of the Fed's monetary policy.
Comments by Minneapolis Fed President Neel Kashkari, adding to a recent string of cautious Fed statements on monetary policy, also played a role in market dynamics. The yield on 10-year Treasuries rose, reflecting investors' wait-and-see attitude towards future Fed interest rate decisions.
The market remains overvalued, with the S&P 500 trading at a 33% premium to its long-term average. This high valuation raises concerns about the market's ability to sustain its recent gains.
- Stockss in brief
Nvidia (-3.44%): The semiconductor giant was particularly hard hit, suffering a significant decline against a backdrop of market consolidation.
Broadcom (-3.35%), AMD (-8.26%), and Qualcomm (-2.39%): These companies also posted significant losses, with technology stocks among the hardest hit by recent developments.
Caterpillar (-1.60%), 3M (-2.84%) and McDonald's (-1.98%): Despite their status as defensive stocks, these three companies saw their share prices fall, illustrating the extent of investor caution.
Paramount Global (-8.51%): The company fell sharply as investors worried about the financial implications of a potential deal with Skydance Media.
Levi Strauss (+12.38%): The company benefited from above-expectation financial results and strong growth in online sales.
HubSpot (+4.97%): The US company saw its share price rise following rumors of a possible takeover by Alphabet, underlining investor interest in companies with solid growth prospects.
Oil on the rise
Crude oil prices rose significantly mid-day, coinciding with a drop in equities on Thursday. WTI topped $86 a barrel, reaching its highest level since October, raising concerns about the impact of energy prices on re-accelerating inflation. Meanwhile, North Sea Brent crude closed above $90 a barrel for the first time in over five months, reflecting increased tension on energy markets.
This increase comes against the backdrop of a deteriorating geopolitical situation in the Middle East. The Israeli army has stepped up its defensive measures, temporarily suspending leave for its combat units and recalling reservists in the face of direct threats from Iran, according to Israeli media reports. This tense situation is contributing to uncertainty on world oil markets, exacerbating fears of galloping inflation linked to energy costs.
Friday
S&P 500 (+0.4%): The broad index's rebound suggests a positive reaction to the March jobs report, despite lingering concerns about inflation and interest rates.
Dow (+0.1%): The index was up slightly at the start of the session, as investors assessed the impact of economic data on future monetary policy.
NASDAQ (+0.4%): The performance of the technology index reflects a degree of confidence in the sector, despite an overall difficult week for the markets.
Employment growth reached 303,000 in March, exceeding expectations, while the unemployment rate stood at 3.8% for the month, in line with forecasts. Wages rose by 0.3% for the month and 4.1% year-on-year, both in line with estimates.
