tiprankstipranks
Trending News
More News >
Spotify (SPOT)
NYSE:SPOT

Spotify Technology SA (SPOT) AI Stock Analysis

Compare
8,254 Followers

Top Page

SP

Spotify Technology SA

(NYSE:SPOT)

Rating:76Outperform
Price Target:
$805.00
▲(13.24%Upside)
Spotify shows strong financial performance and positive technical indicators, which are major strengths. However, its high P/E ratio suggests overvaluation concerns. The positive earnings call underscores strong growth and innovation, balancing some of these valuation concerns.
Positive Factors
Monetization Strategy
Podcast monetization success through the Spotify Partner Program shows strategic shift toward broadening content portfolio beyond music.
Revenue Growth
Revenue growth remains strong, fueled by continued subscriber growth and gains in average revenue per user from price increases.
User Growth
Management emphasized continued strong user growth, particularly in premium subscribers, driving solid revenue growth.
Negative Factors
Currency Pressure
The currency pressure, coupled with a seemingly crowded trade, appears to be driving today's weakness.
Stock Valuation
Analyst downgraded the recommendation from NEUTRAL to REDUCE due to the recent share price strength, with limited upside due to full valuations.
SuperFan Tier
There is dampened expectation for the launch of the Superfan club offering due to the need for more label cooperation.

Spotify Technology SA (SPOT) vs. SPDR S&P 500 ETF (SPY)

Spotify Technology SA Business Overview & Revenue Model

Company DescriptionSpotify Technology S.A. is a leading audio streaming service provider, offering users access to a vast library of music, podcasts, and other audio content. The company operates in the technology and entertainment sectors, delivering an intuitive platform available across various devices, including smartphones, tablets, and desktops. Spotify aims to provide a personalized listening experience through its data-driven algorithms and curated playlists, catering to a diverse global audience.
How the Company Makes MoneySpotify makes money primarily through two revenue streams: Premium Subscriptions and Ad-Supported Services. The Premium Subscription model allows users to access ad-free content, offline listening, and enhanced audio quality for a monthly fee. This subscription service is a significant source of revenue, contributing to a large portion of the company's earnings. The Ad-Supported Service, on the other hand, provides free access to audio content with periodic advertisements. Spotify generates revenue from advertisers who pay to reach its extensive user base through audio, video, and display ads. Additionally, Spotify has strategic partnerships with various device manufacturers and telecommunications companies, which help expand its reach and user base, further enhancing its revenue potential.

Spotify Technology SA Key Performance Indicators (KPIs)

Any
Any
Users
Users
Tracks the number of active users, indicating Spotify’s reach, market penetration, and potential for future growth.
Chart InsightsSpotify's user growth continues to be robust, with a notable increase in both ad-supported and premium subscribers. The recent earnings call highlights strong subscriber additions, particularly in emerging markets, contributing to a 15% revenue growth. Despite challenges in the advertising segment, Spotify's strategic focus on innovation and AI-driven features is enhancing user engagement and operational efficiency. The company's guidance suggests continued momentum, projecting further growth in users and revenue, although currency headwinds and social charges pose potential risks to profitability.
Data provided by:Main Street Data

Spotify Technology SA Earnings Call Summary

Earnings Call Date:Apr 29, 2025
(Q1-2025)
|
% Change Since: 18.92%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance in subscriber growth, revenue, and operational efficiency, with significant advancements in podcast monetization and AI-driven innovation. However, challenges in the advertising business, unexpected social charges, and currency headwinds posed some concerns.
Q1-2025 Updates
Positive Updates
Subscriber Growth Outperformance
Spotify reported its highest Q1 subscriber net additions since 2020, primarily driven by emerging markets such as Latin America and Asia Pacific. Developed markets also saw solid growth, indicating a strong global position.
Strong Financial Performance
Total revenue reached $4.2 billion, up 15% year on year on a constant currency basis. Premium revenue rose 16% year on year, driven by continued subscriber growth and ARPU gains from price increases.
Podcast Monetization Success
The Spotify Partner Program enabled over $100 million in payouts to podcast creators in Q1 2025, with users spending 44% more time with video content overall.
Operational Efficiency Gains
Spotify has decreased the time spent rolling out across Ubiquiti apps by ten times and reduced the timing for scaling new features by six times, indicating significant improvements in operational efficiency.
AI and Innovation
AI is being leveraged to enhance product development and efficiency. New AI-driven features like AI Playlists have been rolled out to 40 markets, improving user interaction.
Negative Updates
Advertising Business Challenges
Spotify's advertising business saw only a 5% year-on-year growth, with softness in advertising pricing despite the introduction of new programmatic advertising tools.
Social Charges Impacting Operating Income
Operating income was impacted by €76 million in social charges, which were €58 million higher than forecasted, affecting profitability.
Currency Headwinds
Currency movements have resulted in an incremental headwind of approximately $100 million, impacting revenue outlook for Q2 2025.
Company Guidance
During Spotify Technology S.A.'s Q1 2025 earnings call, the company shared guidance and various metrics highlighting its performance and outlook. The company reported a total of 678 million monthly active users (MAU), an increase of 3 million, and 268 million premium subscribers, up by 5 million or 12% year-over-year. Total revenue reached $4.2 billion, growing 15% year-over-year on a constant currency basis, with premium revenue rising 16% due to continued subscriber growth and average revenue per user (ARPU) gains from price increases. The advertising segment saw a 5% year-over-year growth on a currency-neutral basis. The gross margin was reported at 31.6%, surpassing guidance by approximately 10 basis points and expanding by about 400 basis points year-on-year. Operating income stood at €509 million, while free cash flow was $534 million. Looking forward, Spotify forecasts 689 million MAU and 273 million subscribers for Q2 2025, with an anticipated total revenue of $4.3 billion and a gross margin of 31.5%. The company remains confident in its long-term growth strategy, emphasizing innovation and execution as key drivers for future performance.

Spotify Technology SA Financial Statement Overview

Summary
Spotify's financial performance is robust, with strong revenue growth, improved profitability, and solid cash flow management. The stable balance sheet with controlled leverage and effective equity utilization supports its healthy financial trajectory.
Income Statement
85
Very Positive
Spotify has demonstrated strong revenue growth with a notable increase from $15.67 billion in 2024 to $16.23 billion in TTM (Trailing-Twelve-Months), reflecting a 3.56% growth rate. The gross profit margin in TTM stands at 30.98%, indicating solid cost management. The net profit margin has improved to 7.19%, reflecting enhanced profitability. EBIT and EBITDA margins are also strong at 10.51% and 9.99% respectively, showcasing effective operational efficiency.
Balance Sheet
78
Positive
Spotify exhibits a stable balance sheet with a debt-to-equity ratio of 0.34, indicating manageable leverage levels. The return on equity (ROE) is 18.67%, demonstrating effective use of equity to generate profits. The equity ratio is 49.24%, suggesting a balanced capital structure with a good portion of assets financed by equity.
Cash Flow
80
Positive
The company shows strong cash flow management with a free cash flow growth rate of 14.84% from 2024 to TTM. The operating cash flow to net income ratio is 2.27, and the free cash flow to net income ratio is 2.25, indicating efficient conversion of income into cash and strong liquidity.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
16.23B15.67B13.25B11.73B9.67B7.88B
Gross Profit
5.03B4.74B3.40B2.93B2.59B2.02B
EBIT
1.71B1.36B-446.00M-659.00M340.00M-293.00M
EBITDA
1.62B1.50B-298.00M-284.00M467.00M-293.00M
Net Income Common Stockholders
1.17B1.14B-532.00M-430.00M-34.00M-581.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
7.91B7.45B3.97B3.35B3.50B1.75B
Total Assets
12.69B12.01B8.35B7.64B7.17B6.33B
Total Debt
2.10B2.00B1.70B1.68B1.78B577.00M
Net Debt
-2.92B-2.78B-1.42B-800.00M-963.00M-574.00M
Total Liabilities
6.44B6.48B5.82B5.24B5.05B3.52B
Stockholders Equity
6.25B5.53B2.52B2.40B2.12B2.81B
Cash FlowFree Cash Flow
2.62B2.28B674.00M21.00M276.00M181.00M
Operating Cash Flow
2.64B2.30B680.00M46.00M361.00M259.00M
Investing Cash Flow
-1.69B-1.49B-217.00M-423.00M-187.00M-372.00M
Financing Cash Flow
653.00M729.00M234.00M-40.00M1.25B285.00M

Spotify Technology SA Technical Analysis

Technical Analysis Sentiment
Positive
Last Price710.85
Price Trends
50DMA
625.79
Positive
100DMA
602.66
Positive
200DMA
508.39
Positive
Market Momentum
MACD
22.76
Negative
RSI
63.56
Neutral
STOCH
83.67
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPOT, the sentiment is Positive. The current price of 710.85 is above the 20-day moving average (MA) of 675.84, above the 50-day MA of 625.79, and above the 200-day MA of 508.39, indicating a bullish trend. The MACD of 22.76 indicates Negative momentum. The RSI at 63.56 is Neutral, neither overbought nor oversold. The STOCH value of 83.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SPOT.

Spotify Technology SA Risk Analysis

Spotify Technology SA disclosed 56 risk factors in its most recent earnings report. Spotify Technology SA reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Spotify Technology SA Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
87
Outperform
$2.13T19.6134.79%0.48%13.02%37.73%
84
Outperform
$2.13T19.4834.79%0.48%13.02%37.73%
82
Outperform
$1.72T26.6439.83%0.31%19.37%47.56%
77
Outperform
$22.90B12.2948.41%17.81%1175.52%
TMTME
76
Outperform
$27.58B21.5114.37%0.98%4.59%83.27%
76
Outperform
$142.73B114.8624.28%16.07%
61
Neutral
$14.56B5.82-4.02%6.41%2.72%-31.67%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SPOT
Spotify Technology SA
710.85
399.63
128.41%
META
Meta Platforms
682.87
177.58
35.14%
GOOGL
Alphabet Class A
174.67
-1.71
-0.97%
TME
Tencent Music Entertainment Group
18.42
4.43
31.67%
PINS
Pinterest
33.84
-9.99
-22.79%
GOOG
Alphabet Class C
175.88
-2.04
-1.15%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.