Jim Cramer’s Game Plan for This Week: 16 Stocks in Focus

5. Spotify Technology S.A. (NYSE:SPOT)

Number of Hedge Fund Holders: 101

Cramer expressed enthusiasm about Spotify Technology S.A. (NYSE:SPOT) and compared it to Netflix.

“If you want to know my favorite trade for the week, it’s going to be Spotify. Now, this has this juicy subscription business. People don’t focus on this company a lot. Lots of people ignore it,  dismissing it as a radio station without commercials. But I think Spotify’s all things entertainment, a competitor to Netflix for your time.”

Spotify (NYSE:SPOT) provides subscription-based audio streaming, allowing users to access a broad range of music and podcasts. JDP Capital Management stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its Q1 2025 investor letter:

“Spotify Technology S.A. (NYSE:SPOT) – Spotify remains our largest position. In the fourth quarter the company’s free cash flow was up 123% over last year resulting from strong operating leverage that the market had not priced in the valuation. Spotify ended 2024 with 675 million subscribers between paid and ad supported. Spotify and YouTube are the primary beneficiaries of the mega trend shift from linear media to podcasting.

One area of disappointment, and an area for possible concern, is the company’s challenges to grow advertising revenue and profitability. Advetising is an important component to the next leg of the company’s profitability inflection and ability to achieve management’s goal of €20 billion in future operating profit. The market has thus far been willing to ignore lagging advertising revenue because of continued growth in paid subscriptions and ability to sustain price hikes. In 2024 advertising only grew 7% representing about 12% of total revenue. Spotify is still struggling with targeting and performance advertising metrics that can compete with other scaled players like YouTube or Instagram. Although not yet alarming to the investment thesis, the lack of advertising revenue growth is something we are watching closely as the economy softens. The stock was up about 20% in the first quarter.”