10Y annualized return is
very good
at 13.7% per year
SPOT has met or exceeded earnings expectations in
few
recent quarters (3/10)
Strong Growth Potential
Decent Profit Margins
Strong Return on Equity
Strong Liquidity Ratios
Low Debt Levels
🚀 Strong Growth Metrics
💰 Record Profitability
📈 Diverse Revenue Streams
🌟 Innovation and Product Development
📊 Strategic Market Positioning
High Valuation Ratios
Thin Net Profit Margin
High EV/EBITDA Ratio
📉 Advertising Growth Challenges
⚖️ Seasonal Variability in Growth
Overall, Spotify demonstrates strong business quality with significant growth metrics and a profitable business model. Future prospects appear promising due to ongoing innovation and strategic positioning, though challenges in advertising growth and seasonal variability need to be addressed.
Analysis Date: February 4, 2025
Last Updated: March 12, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Spotify Technology S.A. is a company that lets people listen to music and podcasts online. They have two main options: a paid service called Premium, where users can enjoy music and podcasts without any ads, and a free service that has ads but still offers access to a large library of music and podcasts. With millions of users around the world, Spotify makes it easy for people to enjoy audio content on their computers and phones.
Core Products
Business Type
Business to Consumer
Latest News
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S&P 500 opens lower on Monday after a holiday weekend in which President Trump threatened to fire the head of the Federal Reserve.
The latest trading day saw Spotify (SPOT) settling at $574.25, representing a +1.99% change from its previous close.
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$68.75
Current Market Price: $444.52
IV/P Ratio: 0.15x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-547.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for SPOT
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (83.52)
P/B ratio ≤ 1.5 (17.20)
Current ratio ≥ 2.0 (1.88x)
Long-term debt < Net current assets (0.51x)
Margin of safety (-547.0%)
SPOT does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
25.68%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
30.01%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
7.26%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
The company's gross profit margin is 30.01%, indicating that it retains a healthy portion of revenue after accounting for the cost of goods sold.
With a return on equity of 25.68%, the company is effectively using its equity to generate profits.
The net profit margin of 7.26% indicates that the company retains only a small fraction of its revenue as profit, which could be a concern for long-term sustainability.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.36x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.88x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
The current ratio of 1.88 and quick ratio of 1.88 indicate that the company has sufficient assets to cover its short-term liabilities.
With a debt to equity ratio of 0.36 and debt to assets ratio of 0.17, the company is not heavily reliant on debt, indicating financial stability.
The EV/EBITDA ratio of 70.86 suggests that the company may be overvalued based on its earnings before interest, taxes, depreciation, and amortization.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Revenue
Spotify experienced its highest Q4 ever for Monthly Active Users (MAU) additions and record high subscriber growth, which reflects a robust demand for its services. The total MAU grew by 35 million to 675 million, and the number of subscribers reached 263 million with an impressive net addition of 11 million in Q4.
The company achieved its first full year of profitability with strong financial metrics, including a gross margin of 32.2% and record free cash flow of EUR 877 million in Q4, indicating efficient cost management and a scalable business model.
Spotify's revenue is bolstered by both subscription services and a growing advertising business. Although ad revenue growth was slower, there are plans to enhance this segment through programmatic advertising, which will leverage its large user base.
Despite the growing user base, the advertising segment has faced disappointing growth, reflecting a disconnect between engagement and revenue generation. The transition to programmatic advertising may take time to yield significant results.
Spotify is intensifying its focus on innovation, with plans for accelerated execution in 2025, emphasizing new features like enhanced music experiences, video podcasts, and tiered subscription offerings. The successful launch of video podcasts indicates strong potential for future engagement.
The company is well-positioned to capitalize on emerging markets and new content formats such as audiobooks and educational content, which could drive growth in subscriber numbers and engagement.
The company anticipates a seasonal slowdown in MAU and subscriber growth for Q1 2025, which could impact overall growth momentum. The focus will be on retaining higher-value users rather than simply increasing user count.
Insider trading data shows purchase and sale activities by company executives and board members.
Insider trading patterns can provide insights into how company executives and board members view the stock's future prospects.
Insiders are selling significantly more than buying (ratio: 0.00x)
Total Bought
Total value of insider purchases in recent quarters
SPOT: No insider purchase data available
Total Sold
Total value of insider sales in recent quarters
SPOT: No insider sale data available
Active Insiders
Number of insiders trading in recent quarters
SPOT: No insider activity data available
Recent Trend
Change in insider trading pattern
SPOT: No trend data available