Shares in Spotify (SPOT) are surging more than 5% in Wednesday’s pre-market trading after the music streaming company announced a multi-year license agreement with Vivendi’s Universal Music Group.
The stock is currently trading at $290.65 in pre-market. As part of the agreement, the two companies will collaborate on new, state-of-the-art marketing campaigns across Spotify’s platform, they said in a joint statement. Furthermore, Universal Music will deepen its leading role as an early adopter of future products and provide valuable feedback to Spotify’s development team.
“From their early experimentation with Marquee, to testing new experiences like Canvas, Universal Music Group has been an important partner in helping to shape the development of our marketing tools,” said Spotify CEO Daniel Ek. “With today’s announcement, we will expand on this level of early stage innovation and further strengthen our partnership and shared vision for helping advance artists at all stages of their careers.”
Ek added that the goal of the company’s marketplace strategy is to harness Spotify’s ability to connect artists with fans and bring new opportunities to the industry.
Spotify is the world’s most popular audio streaming subscription platform with more than 286 million users, including 130 million Spotify premium subscribers, across 92 markets.
Earlier this month, Spotify announced the launch of its music streaming service in Russia and said it was also introducing a video feature for podcasts.
Last week, SunTrust analyst Matthew Thornton raised Spotify’s price target to $290 (4.9% upside potential) from $167 and reiterated a Buy rating, saying that based on his Search Interest and App Download data analysis, the company’s Q2 results should be “solid”.
Thornton is confident about Spotify’s outlook for the rest of the year following a number of developments, including the launch of the Duo plan, the launch in Russia and 12 other European markets, a broader rollout of the sponsored recommendation ad product, and the company’s Omnicom podcast ad partnership.
Overall SPOT shows a cautiously optimistic Moderate Buy consensus. With shares currently trading up 52% on a year-to-date basis, the $248.62 average analyst price target implies 10% downside potential over the coming year. (See SPOT stock analysis on TipRanks).
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