Is it time for Spotify Technology (SPOT) to rock and roll? With shares back to their IPO price from last year, Jim Cramer said during Wednesday night's Mad Money program that the streaming music provider may have finally found its footing.
Spotify came public to a lot of excitement in 2018, but after a short rise, shares have been sliding lower since. Cramer said part of the reason is that investors haven't been able to determine which metrics really matter for Spotify. Should they pay attention to active users, paid subscribers or revenue? Even the analysts aren't sure, which has led to upgrades and downgrades that make following the stock a dizzying experience.
But this past quarter, the company finally put all of those questions to rest with a 28% rise in year-over-year revenues and a 30% gain in subscribers. Shares responded by rallying 3.2%, and Cramer said the company is now positioned for long-term success, thanks in part to a non-promotional management team that never overplays their successes.
Let's check out the latest charts and indicators.
In this daily bar chart of SPOT, below, we can see the recent improvement in the chart and indicators. Prices gapped higher and are trading above the bottoming 50-day moving average line and the flat to slightly rising 200-day line.
The daily On-Balance-Volume (OBV) line shows an uptrend from December despite prices showing two weak periods in the past year. This suggests that buyers of SPOT have been focused on the future and not worried about interim declines.
The Moving Average Convergence Divergence (MACD) oscillator just moved back above the zero line for an outright go long signal.
In this weekly bar chart of SPOT, below, we do not have two years of price history to work with but it is turning more positive. Prices are back above the 40-week moving average line.
The weekly OBV line has started to improve and the MACD oscillator is poised to cross to the upside for a cover shorts buy signal.
In this weekly Point and Figure chart of SPOT, below, we can see that a bullish upside price target of $209 is being projected.
Bottom line strategy: Aggressive traders could try to buy a shallow one or two day pullback on SPOT and risk below $120. The $200 area is our longer term price objective.