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Spotify Technology SA SPOT Stock Quote

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Morningstar‘s Stock Analysis SPOT

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Is it the right time to buy or sell?

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Spotify Posts Impressive Listener Growth; Margin Expansion to Begin in 2023; Shares Undervalued

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Spotify reported mixed third-quarter results with a top-line beat but a miss on the bottom line when compared with the FactSet consensus estimates. While the ad-supported segment displayed some weakness due mainly to the macro environment, the premium segment’s subscriber count and monetization continued to post healthy growth, although contribution from foreign exchange was material. The firm’s fourth-quarter outlook was also mixed with revenue and operating guidance ahead of and worse than current expectations, respectively. We adjusted our revenue estimates lower to account for lower ad spending during this year and part of 2023. Our new fair value estimate for Spotify, which also takes into account the stronger dollar, is now $170, down from $187. In our view, shares of no-moat Spotify remain attractive at current levels.

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Key Statistics SPOT

Company Profile SPOT

Business Description

Spotify, headquartered in Stockholm, Sweden, is one of the world’s largest music streaming service providers, with over 150 million total listeners. The firm monetizes its users through both 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 90% and 10% of Spotify’s 2017 total revenue, respectively.

42-44, Avenue de la Gare
Luxembourg, L-1610, Luxembourg
Industry Internet Content & Information
Most Recent Earnings Sep 30, 2022
Fiscal Year End Dec 31, 2022
Employees 6,617

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