Spotify Technology SA launched audiobooks in the United States last week.
What Happened
Commenting on the development, KeyBanc Capital Markets analyst Justin Patterson reiterated an Overweight rating and a $148 price target for Spotify shares.
Audiobooks could be immaterial to Spotify’s performance into the year-end and likely in 2023, too, Patterson said in a note.
Citing reasons for the deduction, the analyst said the revenue model for audiobooks is entirely transactional at launch. Secondly, it will take meaningful audiobook sales to move the needle, Patterson added.
The analyst currently estimates audiobook sales of over two million units in the fourth quarter. This would add only less than 20 basis points to gross margin percentage, he added….