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Spotify Technology SA SPOT

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Stock XNYS Rating as of
$281.23 −22.08 (7.28%)
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As of Delayed Price Closed
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Company Report

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Spotify Earnings: Stellar Profits While Revenue Growth Accelerates

Matthew Dolgin

Significant margin improvement was the most encouraging component of no-moat Spotify’s excellent first-quarter results. Revenue growth accelerated and was in line with management’s guidance, which is encouraging, considering the cost-cutting program put in place in 2023 and monthly active users coming in slightly below management’s target. We’re raising our fair value estimate to $230 from $215, but it’s difficult for us to rationalize the stock’s valuation.

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Price vs Fair Value

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SPOT is trading at a 32% premium.
Price
$303.49
Fair Value
$793.00
Uncertainty
Very High
1-Star Price
$729.10
5-Star Price
$386.00
Economic Moat
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Capital Allocation
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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
$303.31
Day Range
$278.14–305.64
52-Week Range
$128.67–319.30
Bid/Ask
$274.80 / $278.50
Market Cap
$55.78 Bil
Volume/Avg
8.2 Mil / 2.4 Mil

Key Statistics

Price/Earnings (Normalized)
416.35
Price/Sales
3.98
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
Mid Growth
Total Number of Employees
9,123
Website
https://www.spotify.com

Comparables

Valuation

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Metric
SPOT
VOLO
NBA
Price/Earnings (Normalized)
 416.3539.118.75
Price/Book Value
 16.834.511.00
Price/Sales
 3.981.2511.20
Price/Cash Flow
 106.0315.28—
Price/Earnings
SPOT
VOLO
NBA

Financial Strength

Metric
SPOT
VOLO
NBA
Quick Ratio
 1.380.93238.74
Current Ratio
 1.421.80238.97
Interest Coverage
 −2.144.16—
Quick Ratio
SPOT
VOLO
NBA

Profitability

Metric
SPOT
VOLO
NBA
Return on Assets (Normalized)
 3.49%5.32%2.86%
Return on Equity (Normalized)
 11.24%16.69%2.86%
Return on Invested Capital (Normalized)
 5.13%9.92%2.58%
Return on Assets
SPOT
VOLO
NBA
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