Investors Cautious Following Spotify Service Disruption
Spotify Outage Sparks Security Hack Rumors
In what feels like an increasingly common occurrence, a widespread Spotify outage on April 16 left millions of users without access to the popular music streaming platform, swiftly triggering rumours of a major ‘security hack.’ Although the service was restored relatively quickly and the firm vehemently denied allegations of a cybersecurity incident, Spotify (NYSE: SPOT) stock experienced a deep plunge, falling approximately 3.89% from around $567 to roughly $545 during the height of the incident. Subsequently, the platform’s equity enjoyed a substantial recovery, though it still ended the session 1.62% in the red at $563.07.
On April 17, investors appear to have regained some confidence in the stock as it has rallied 1.88% in the pre-market and is, at press time, changing hands at $573.68.
The lack of a long-term negative reaction to the outage can be attributed to both the relatively swift restoration of services and the fact that other recent global outages have not left a lasting or visible mark. For example, the March outage of Elon Musk’s social media platform X has not led to known negative effects other than depriving its users of the service for more than 24 hours. Elsewhere, though the CrowdStrike (NASDAQ: CRWD) outage of 2024 had a deep impact on numerous businesses around the world, as the issue affected computers of major organizations such as airports, its aftereffects have long been resolved for the vast majority of people.
While no direct depressing effect of the Spotify outage is visible for SPOT shares in the morning of April 17, the equity remains under threat from the macroeconomic factors that have led to massive volatility and multiple downturns in recent months. Simultaneously, the Spotify outage jitters – and the subsequent recovery – have ensured that SPOT stock’s developing triangle chart pattern has only further consolidated, as the prominent equity analyst Ali Martinez pointed out on X on Thursday:
Potential Price Movement for SPOT
Spotify $SPOT is consolidating within a triangle pattern, setting the stage for a potential 30% price move. If investor sentiment turns increasingly bearish, either due to external factors or future revelations about the Spotify outage, SPOT shares could suffer a 30% plunge. On the other hand, it is equally possible that the platform’s stock will enjoy a bullish breakout of the same magnitude, according to the analyst.
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