Spotify (NYSE:SPOT) stock was initiated with a Buy rating and $310 price target at HSBC on Wednesday. Shares of the company are up more than 1% premarket.
In a research note, the bank told investors that Spotify is a music streaming leader with new verticals and large opportunities.
Citing its significant active user base of 602 million, HSBC said the company is well positioned to capture the opportunity beyond music.
"As we show using data from our 2024 UK consumer survey, the cross sell from music to podcasts/audiobooks looks like a strategy built on firm ground," said HSBC. "2023 revenue of EUR13bn (USD14.5bn) is a fraction of the USD170bn 2030 market opportunity that it sees across music, podcasts and audiobooks."
HSBC also stated the opportunity does not end there, with Spotify now trialling education courses and other verticals that are yet to be announced. They also see potential opportunities in other revenue streams such as merchandising and ticket sales.
"Spotify has historically been loss-making but recent restructuring, alongside improved podcast profitability, should help to move it to an operating profit in 2024," added HSBC. "Spotify screens well against peers given its strong growth outlook."