Spotify (SPOT – Free Report) went public in early April at a time when subscription-based streaming was mainstream, and maybe that’s the problem. Amid increased competition from Apple (AAPL – Free Report) Music in the U.S., along with competing services from other tech powerhouses, let’s dive into Spotify to see what investors should make of the company roughly six months after its IPO.

Overview

Spotify closed its first day of trading on April 3 at $149.01 per share. The company’s first day landed the firm a market value of $26.54 billion, which helped it become the eighth-largest tech IPO after one day of trading, right behind Google (GOOGL – Free Report) in 2004. Shares of SPOT surged for the next four months to close at over $192 per share in late August. Since then, Spotify stock has fallen back down toward its April prices.

The company, which is the world’s largest paid music service, closed the second quarter with a monthly active user base of 180 million, up 30% from the year-ago period. SPOT’s ad-supported MAUs surged 23% to 101 million. More importantly, Spotify’s premium subscribers soared 40% from the year-ago period and 10% sequentially to close the quarter at 83 million.

Spotify’s premium user growth is key since these members accounted for roughly 90% of the firm’s total revenues last quarter. It is worth noting that the streaming company’s total quarterly revenues climbed 26% to 1.27 billion euros.

The company did report an operating loss of 90 million euros. But Spotify’s user growth will likely remain a Wall Street focus for some time. (The chart below comes from Spotify’s Q2 earnings statement.)

News

MKM Partners analyst Rob Sanderson maintained a “Buy” rating for Spotify stock earlier this week. The analyst also reiterated his $245 price target, which represented a roughly 64% upside to Wednesday’s closing price of $149.48 per share. Sanderson cited Spotify’s ability to scale to hundreds of millions of users, along with its ability to collect data, as major reasons for his positivity.