Spotify shares rose after Stifel Issues Buy Rating

Spotify Technology SA (NYSE: SPOT) traded higher on Thursday after Stifel initiated coverage of the music streaming company with a buy rating.

Stifel analyst John Egbert said Spotify is the largest streaming music provider and the demand for all-you-can-listen music streaming service is high.

Spotify shares rose 4.4 percent to $150.62 in the early trading on Thursday. Spotify went public in NYSE on Tuesday and its shares jumped as much as 28 percent to hit a high of $169. But the stock gave up some of its gains later and fell 3 percent on Wednesday.

"We believe an all-you-can-listen-to on-demand music streaming service for $9.99 a month is high on the list of Internet services offered on a value per dollar basis, right behind's Amazon's $99 a year all-you-can-order (and more) Prime membership and Netflix's $10.99 a month all you-can-watch subscription," analyst John Egbert said in a note, according to CNBC.

Egbert issued a target price of $180 for Spotify stock, citing that the company will double both its user base and paying subscribers, and be profitable by 2021.

Spotify now has 70 million paying subscribers as of December and it charges $9.99 per month for its music streaming service.

"We think Spotify's market leadership, emerging markets exposure, favorable user demographics, the secular shift to mobile and digital services, as well as the near-universal appreciation of music, will support Spotify's growth for years to come," he said, according to CNBC.

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