Market Overview

Cramer: Investors Made 'Particularly Egregious Error' In Selling Spotify

Cramer: Investors Made 'Particularly Egregious Error' In Selling Spotify
Analysts Positive On Spotify's Content Spending Despite Margin Impact
TCV Acquires Stake In Retail Solutions Provider RELEX Solutions
Tracking George Soros's Portfolio - Q4 2018 Update (Seeking Alpha)

Streaming music provider Spotify Technology SA (NYSE: SPOT) reported its first earnings as a public company last week. Based on the 10-percent decline in the stock, investors weren't pleased.

Was the downward move justified? CNBC's Jim Cramer said no, and called the sell-off a "particularly egregious error."

What Happened

Spotify's earnings report matched expectations, only to be unfairly "clobbered for delivering in-line numbers," Cramer said during his daily "Mad Money" show Monday. Spotify is one of the "most straightforward, honest companies" and is led by CEO Daniel Elk, "the straightest of straight-shooters," Cramer said. This may have hurt the stock after the company opted not to undertake a "bombastic, promotional" IPO in favor of a direct listing, the CNBC host said.

"It was the most non-promotional thing I've seen from a major technology company in years, maybe decades."

Why It's Important

Spotify's stock woes after the print could also be attributed to a pattern of new stock listings, Cramer said: short-term investors expect management to "sandbag them with low-ball numbers," only for a company to "blow away" estimates in the first quarterly report.

The more important takeaway from Spotify's report is that investors now "know what to expect," and that doesn't include future earnings misses, Cramer said.

What's Next

"For the sellers who dumped Spotify [stock] last week, I say, 'good riddance,'" Cramer said.

"They are missing this address. Bottom line? Do not let last week's sell-off in Spotify scare you. It just got punished because a bunch of investors let their expectations get out of control. To me, that says these guys are incredibly straight shooters. I think that's amazing. I'd be a buyer."

Related Links:

Spotify's First Earnings Report On Wall Street: The Sell-Side Reacts

A Spotify Sell-Side Roundup: Wall Street Largely Bullish On Streaming Platform's Stock

Posted-In: CNBC Daniel Elk Jim Cramer Mad MoneyEarnings News Tech Media Best of Benzinga


Related Articles (SPOT)

View Comments and Join the Discussion!

Here Are The Benzinga Global Fintech Award Finalists For The Best Biometrics Tool Or Cyber Security Platform

William Blair Cautious On North American P&C Insurance Market, Moves To Sidelines On Sapiens International