With consumer spending strong enough to drive GDP growth all the way to 4.7% and retail stocks getting punished by lower revenue, the question on everyone's mind is simple:
Where is all this spend happening?
We finally got a clear answer last week when Spotify ($SPOT) posted an incredible earnings win that showed far greater subscription growth than expected and hit our price target.
The short answer here is simple: while consumer spending is on the rise, we're all still feeling the heavy hand of inflation as broad wages are barely starting to keep up. Consumers worldwide are simply being far more considerate in their purchases and are trying to make their money have as much "mileage" as possible.
Services like Spotify go a long way for folks, as the company managed to add over two million more subscribers than The Street anticipated in Q3. On top of that, Spotify is in a category all on their own as they're adding new products to their service all the time that users appreciate and actually use.
More importantly, Spotify has crossed several key thresholds in Q3 that make them a solid pick as a more "defensive" growth stock. Some of these shifts also hint at the huge growth opportunities Spotify is gearing up to tackle now that costs are under control.
So, with the stock hit with some brief headwinds thanks to an uncertain macro situation, let's lock in as much upside as we can now that Spotify has hit a key turning point.
The details here largely speak for themselves, but let's make sure we add in some critical context so we can better understand the real scale of the opportunity here.