Strength Seen in Spotify (SPOT): Can Its 8.2% Jump Turn into More Strength?

Spotify (SPOT) shares ended the last trading session 8.2% higher at $291.77. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1% gain over the past four weeks.

Spotify’s stock price increased on reports that it may raise prices on its plan. Bloomberg reported on Wednesday that Spotify intends to hike its plans’ prices by $1-$2 per month in five markets, including the U.K., Pakistan and Australia, by the end of April.

 

This music-streaming service operator is expected to post quarterly earnings of $0.70 per share in its upcoming report, which represents a year-over-year change of +156.5%. Revenues are expected to be $3.87 billion, up 18.6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Spotify, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SPOT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Spotify is part of the Zacks Technology Services industry. Allot Communications (ALLT), another stock in the same industry, closed the last trading session 7.7% higher at $2.37. ALLT has returned 7.8% in the past month.

Allot Communications' consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.10. Compared to the company's year-ago EPS, this represents a change of +52.4%. Allot Communications currently boasts a Zacks Rank of #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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