Spotify Rocks to 2-Year Highs: Tune In or Tune Out?
Spotify recently made a move that may further increase its popularity among users.
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Over the past 25 years, streaming music has gone from an oddity to a staple for U.S. consumers. Music lovers can choose to enjoy Apple Music AAPL , Amazon Music AMZN , and YouTube GOOGL , as well as several smaller brands. Satellite radio is also available, from Sirius XM SIRI .
With 574 million subscribers, the most popular music streaming service is Spotify SPOT . This company provides a high-quality listening experience at a reasonable cost. Spotify allows access to its massive audio library to users anywhere in the world, provided they have an internet connection.
Last year, shares of Spotify climbed nearly 130%. On Thursday, the stock closed at its highest level in nearly two years. Let's go to the charts to see if Spotify can keep on rocking.
Spotify has been trending steadily higher over the past year. The stock is trading above its 50-day (blue) and 200-day (red) moving averages, as well as its bullish trend line (black diagonal line).
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Charts via Tradingview
While Spotify's daily chart shows smooth sailing ahead, its weekly chart shows a resistance level coming into view. The neckline of a topping pattern from 2020/2021 (black horizontal line) extends to the $209 area, just $5, or about 3%, above Thursday's closing price.
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Charts via Tradingview
Traders should consider entering a partial long position at current levels, and adding to that position on either a pullback or a breakout.
While popularity has been a strong suit for Spotify, profitability has been elusive at times. Spotify is more focused on market share than profitability, a tactic used successfully in the past by Amazon. That strategy involves first getting as many consumers as possible into your tent, and then switching the focus to monetization.
Spotify recently made a move that may further increase its popularity among users. The company's 226 million premium subscribers can now enjoy 15 hours per month of free access to 200,000 audiobooks.
This is a clear shot at Amazon's Audible service. Spotify users who also subscribe to Audible may now find the latter service redundant and expendable.
Spotify is scheduled to report earnings on February 6.
At the time of publication, Ponsi was long SPOT.
