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Spotify Technology SA SPOT

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Stock XNYS Rating as of
$321.88 −7.07 (2.15%)
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As of Delayed Price Closed
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Company Report

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Spotify Earnings: Significantly Improving Profitability Drives Our Fair Value Estimate to $250

Matthew Dolgin

Record operating income and an outlook foreshadowing another huge jump in profit underpinned a 10% rise in Spotify’s stock following its second-quarter earnings release. The firm has now posted operating profit in three of the last four quarters after historically generating losses, giving us more confidence that the business has matured and can achieve consistent profitability. A rise in our margin assumptions leads us to increase our fair value estimate to $250 from $230.

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Price vs Fair Value

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SPOT is trading within a range we consider fairly valued.
Price
$321.88
Fair Value
$231.00
Uncertainty
Very High
1-Star Price
$573.30
5-Star Price
$587.00
Economic Moat
Kqxt
Capital Allocation
Pfpdcmhn

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
$328.95
Day Range
$320.20–331.37
52-Week Range
$129.23–346.23
Bid/Ask
$321.35 / $322.14
Market Cap
$64.64 Bil
Volume/Avg
2.0 Mil / 1.7 Mil

Key Statistics

Price/Earnings (Normalized)
121.16
Price/Sales
4.12
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
7,372
Website
https://www.spotify.com

Comparables

Valuation

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Metric
SPOT
TRUE B
SBO
Price/Earnings (Normalized)
 121.1623.6510.10
Price/Book Value
 14.169.031.54
Price/Sales
 4.127.001.15
Price/Cash Flow
 66.0623.8726.10
Price/Earnings
SPOT
TRUE B
SBO

Financial Strength

Metric
SPOT
TRUE B
SBO
Quick Ratio
 1.525.670.32
Current Ratio
 1.565.673.40
Interest Coverage
 5.51—32.65
Quick Ratio
SPOT
TRUE B
SBO

Profitability

Metric
SPOT
TRUE B
SBO
Return on Assets (Normalized)
 9.84%22.73%4.51%
Return on Equity (Normalized)
 29.27%28.00%10.26%
Return on Invested Capital (Normalized)
 16.13%24.98%5.71%
Return on Assets
SPOT
TRUE B
SBO
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