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Spotify Technology SA SPOT

Morningstar Rating
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Stock XNYS Rating as of
$313.02 +7.01 (2.29%)
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As of Delayed Price Closed
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Company Report

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Spotify's Scale Is Leading the Firm to Profitability Even as Revenue Growth Stays High

Matthew Dolgin

Spotify is the world’s leading music streaming service provider. We expect fast-growing digital streaming to become the primary distribution platform of choice in the ever-changing music industry. We believe Spotify can benefit from various network effects that will help it increase users and amass valuable intangible assets associated with user data and listening preferences. However, it faces intense competition from huge tech platforms with greater resources, and it has a largely variable cost structure that may limit future operating leverage and profitability.

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Price vs Fair Value

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SPOT is trading at a 184% premium.
Price
$313.02
Fair Value
$881.00
Uncertainty
Very High
1-Star Price
$648.90
5-Star Price
$213.00
Economic Moat
Dfsr
Capital Allocation
Qbtwwfd

Bulls Say, Bears Say

Bulls

Spotify’s listener growth may help the firm negotiate much better terms with record labels over time.

Bears

Apple, Alphabet, and Amazon can allocate more capital toward their music streaming offerings and potentially take users from Spotify.

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News

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Trading Information

Previous Close Price
$306.01
Day Range
$305.85–316.70
52-Week Range
$129.23–331.08
Bid/Ask
$312.98 / $318.27
Market Cap
$62.31 Bil
Volume/Avg
2.0 Mil / 2.0 Mil

Key Statistics

Price/Earnings (Normalized)
233.02
Price/Sales
4.11
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
—

Company Profile

Spotify, headquartered in Stockholm, Sweden, is one of the world’s largest music streaming service providers, with 602 million monthly active users at the end of 2023. The firm monetizes its users through a paid subscription model, referred to as its premium service, and an ad-based model, referred to as its ad-supported service. Revenue from premium and ad-supported services represented 86% and 14% of Spotify’s 2023 total revenue, respectively.
Sector
Communication Services
Industry
Internet Content & Information
Stock Style Box
Large Growth
Total Number of Employees
9,123
Website
https://www.spotify.com

Comparables

Valuation

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Metric
SPOT
TRUE B
SBO
Price/Earnings (Normalized)
 233.0221.159.68
Price/Book Value
 17.446.631.48
Price/Sales
 4.116.981.10
Price/Cash Flow
 109.4323.2825.02
Price/Earnings
SPOT
TRUE B
SBO

Financial Strength

Metric
SPOT
TRUE B
SBO
Quick Ratio
 1.388.610.32
Current Ratio
 1.428.613.40
Interest Coverage
 −4.75—32.65
Quick Ratio
SPOT
TRUE B
SBO

Profitability

Metric
SPOT
TRUE B
SBO
Return on Assets (Normalized)
 4.57%25.65%4.51%
Return on Equity (Normalized)
 14.73%31.27%10.26%
Return on Invested Capital (Normalized)
 6.53%27.33%5.71%
Return on Assets
SPOT
TRUE B
SBO
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