Pivotal Research analyst Jeffrey Wlodarczak downgraded Spotify to Hold from Buy with a price target of $110, down from $235. The company reported a modestly better than expected Q1, but the in-line Q2 user and revenue guidance were offset by materially higher than forecast Q2 spend, Wlodarczak tells investors in a research note. While investing to drive future subscriber growth is not necessarily a bad move operationally, deferring cash flow unsurprisingly was viewed quite negatively by the market, says the analyst. Wlodarczak believes the long-term Spotify 30%-35% gross margin target “seems reasonable,” but adds that “we are in a market (rising real rates) that is focused on short term profitability.”