What happened
Shares of Spotify (SPOT 2.77%) jumped 10% on Thursday, following bullish comments by a respected analyst team.
So what
Goldman Sachs analyst Heath Terry reiterated his buy rating for Spotify's shares and lifted his target price from $205 to $280. That represents potential gains for investors of roughly 15% from the stock's closing price on Wednesday, and about 5% following the stock's gains on Thursday.
Shares of Spotify rose sharply on Thursday. Image source: Getty Images.
Terry cited Spotify's recent deals with celebrities Joe Rogan and Kim Kardashian West as some of the reasons for his bullishness. Terry believes that these podcast deals will help to differentiate Spotify from its rivals, thereby boosting its subscriber growth and advertising revenue. And while he notes that Spotify paid hefty sums to lure Rogan -- who reportedly will be paid more than $100 million -- and others to its platform, Terry believes the potential rewards for doing so outweigh the risks.
Now what
Spotify is making aggressive moves to gain share in the fast-growing podcast market. It knows that it needs to make a splash to wrestle away listeners from streaming services offered by the likes of Apple and Amazon, and it's shown that it's willing to spend big to do so.
Judging by its stock's recent gains, investors appear to like Spotify's strategy.
