Spotify Technology SA (SPOT) (SPOT) is on the cusp of signing a multi-million dollar sponsorship deal with Spanish football giants Barcelona. Citing media reports from Spain, Reuters reports that the music streaming juggernaut has agreed to a three-year deal worth $320 million. SPOT shares fell 1.67% to close at $171.51 on February 7.
Spotify is a Luxembourg-based company that offers audio streaming services. It generates revenue from Premium and ad-supported segments backed by a community of over 320 million users across 92 markets.
Spotify- Barcelona Deal
The $320 million deal will cover shirt and stadium sponsorship. Consequently, the Barcelona men’s and women’s teams will wear the Spotify logo on their shirts. In addition, Spotify will be the first company to sponsor the Camp Nou and could be granted naming rights to the stadium as part of the deal.
Spotify is to replace Japanese electronics company Rakuten, which has sponsored the men’s team since 2017. Toolmaker Stanley Black & Decker has been the official women’s shirt sponsor since 2018.
Stock Rating
Last week Wells Fargo analyst Steven Cahall reiterated a Sell rating on Spotify stock and cut the price target to $153 from $200, implying 10.79% downside potential to current levels. The downgrade comes amid concerns that the company’s margin progress is slowing on more content and advertising R&D. In addition, the analyst is wary of the company’s profitability metrics.
Consensus among analysts is a Moderate Buy based on 16 Buys, 6 Holds, and 1 Sell. The average Spotify price target of $253.59 implies 47.86% upside potential to current levels.
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