Streaming audio leader Spotify stock (NYSE: SPOT) gained about 7% over the last week (five trading days) outperforming the S&P 500 which was up by about 2% over the same period. Although there hasn’t been much news specific to Spotify in recent days, the tech space, in general, has witnessed renewed investor interest, with the Nasdaq up by about 4% over the last week, amid lower than expected jobless claims and cooling inflationary pressures. So is Spotify stock poised to rally further or could it see a decline? Per our machine learning engine, which analyzes historical stock price data, Spotify stock has a 54% chance of a rise over the next one month (21 trading days) after gaining 7% in the last five trading days. The one-month expected return for the stock is about 4%. See our analysis Spotify Stock Chances of Rise for more details.

That said, the longer-term outlook for Spotify remains mixed. While Spotify trades at about 4x projected 2021 revenues, below the 7.5x streaming video behemoth Netflix NFLX trades at, we have some concerns. Spotify’s monthly active user growth has been slowing down amid mounting competition from platform players such as Apple AAPL and Amazon AMZN - who have much more muscle in terms of financial resources and software ecosystems, and regional players - who have a better understanding of regional tastes. MAUs stood at 356 million users in Q1, a slower than expected growth of 24% versus last year. The full-year outlook was also disappointing, with the company expected to grow users at 19% at the midpoint of guidance. Moreover, driving meaningful profitability, in the long run, remains a concern for a couple of reasons. Spotify pays a chunk of its revenues to music rights holders, and its payments are tied to metrics such as play counts. This means that as revenues scale-up, payments will likely rise, too. Although Spotify is investing big in original content such as podcasts in order to differentiate itself and improve its leverage, this will increase cash costs in the near term.

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