Spotify (NYSE:SPOT) shares closed more than 6% higher on Friday following the Wednesday sell-off, despite the company’s reported largely better-than-expected Q1 results, with EPS coming in at EUR 0.21 and MAUs (Monthly Active Users) growing 19% year-over-year to 422 million. Premium Subscribers increased 15% year-over-year to 182 million.

The sell-off was driven by the disappointing gross margin commentary. The Q2 guidance for margins was lower than street estimates, with management expecting gross margin to remain largely flat for the balance of the year relative to the Q1 margin of 25.2%.

Given that much of the drag on margin is driven by increased spend targeted at developing and expanding the podcast offering, analysts at Deutsche Bank take a wait-and-see approach on to what extent these investments are going to drive the advertising business, as they still have yet to really see any meaningful returns generated from the push into podcasting.

There could be a long-term positive investment narrative associated with the podcasting opportunity, but in the near term, the analysts think the shares will likely trade sideways until there is a much more significant flow through of advertising and podcasting revenue that can be attributed back to the investments that are continuing to hold back the company from realizing leverage. The analysts lowered their price target to $115 from $140, while maintaining their hold rating.