What to Expect From Spotify’s Upcoming Analyst Day

• Goldman Sachs maintains a "Buy" rating for Spotify Technology S.A. (NYSE:SPOT), with a stock price of $621.77, indicating confidence in its growth prospects.
• Spotify reports significant user base expansion with monthly average user net additions of 35 million and an 11% increase in premium subscribers to 263 million.
• Despite missing earnings estimates, Spotify's quarterly sales reached $4.53 billion, a 16% increase, surpassing consensus estimates and highlighting its strong revenue generation capabilities.

Spotify Technology S.A. (NYSE:SPOT), a leading music streaming service, competes with giants like Apple Music and Amazon Music, securing a significant market share. On February 4, 2025, Goldman Sachs reiterated its "Buy" rating for Spotify, reflecting confidence in the company's growth prospects with a stock price of $621.77.

Key to Spotify's success is its strong subscriber growth and rising margins. The company reported an impressive expansion of its user base, with monthly average user net additions of 35 million, surpassing guidance by 10 million. Premium subscribers grew by 11% to 263 million, exceeding expectations by 3 million, showcasing Spotify's ability to attract and retain users globally.

Despite missing earnings estimates with $1.88 per share against the expected $2.06, Spotify's quarterly sales reached $4.53 billion, surpassing the consensus estimate of $4.15 billion. This 16% increase in sales underscores Spotify's robust revenue generation capabilities, even as it continues to invest in expanding its user base and enhancing its platform.

Analysts like Goldman Sachs' Eric Sheridan and JP Morgan's Doug Anmuth have shown optimism towards Spotify's performance, with Sheridan setting a price target of $550 and Anmuth maintaining an Overweight rating. The stock's current price of $621.77 marks a significant increase of 13.24% or $72.69, indicating strong investor confidence.

With a market capitalization of approximately $121.72 billion, Spotify stands as a major player in the music streaming industry. The stock has seen a trading volume of 6,513,129 shares today, fluctuating between a low of $581.07 and a high of $623.40, the latter being its highest price over the past year. The lowest price for SPOT in the past year was $227.52, showcasing its substantial growth.

Spotify (NYSE:SPOT) shares rose more than 5% intra-day today after UBS analysts increased their price target for the stock to $540, up from $485, while maintaining a Buy rating. This upgrade reflects optimism about the streaming giant’s sustained growth trajectory and strategic initiatives expected to drive further financial gains in 2025 and beyond.

The company achieved significant milestones in 2024, including robust revenue growth of approximately 20%, over 400 basis points of gross margin expansion, and a ramp-up in free cash flow.

Looking ahead to 2025, Spotify is projected to maintain its momentum with over 13% revenue growth (excluding FX impacts), supported by the addition of 23 million premium subscribers and a strategic focus on enhancing its product portfolio to unlock future monetization opportunities.

Spotify's gross margins are expected to continue expanding, with projections of a 230-basis-point increase to 32.3%, driven by investments in its partner program. Free cash flow is forecasted to climb to €3.0 billion in 2025, a significant increase from €2 billion in 2024.

Key catalysts for Spotify's growth include the potential launch of premium and superfans tiers, further price increases tied to product enhancements such as expanded audiobook offerings in new markets, potential updates to family plan structures, and improved advertising revenue as programmatic partnerships gain scale.

With these initiatives and an evolving product lineup, the analysts believe Spotify is well-positioned to capitalize on its long-term financial goals, reinforcing its status as a leader in the streaming industry.

Spotify Technology S.A. (NYSE:SPOT) is a leading music streaming service known for its vast library and personalized playlists. The company competes with other streaming giants like Apple Music and Amazon Music. On November 12, 2024, Spotify reported its third-quarter earnings, revealing an earnings per share (EPS) of $1.61, which was below the expected $1.88. The company's revenue was approximately $4.44 billion, slightly missing the forecasted $4.48 billion.

Despite the earnings miss, Spotify's Q3 report showed mixed results. The company exceeded expectations in user additions, which is a positive sign for its growth. However, the revenue shortfall has raised concerns about Spotify's valuation and future growth prospects. The stock's recent rally seems vulnerable due to risks like inconsistent user trends and potential customer churn from price increases, as highlighted by Seeking Alpha.

Spotify's financial metrics reveal a high valuation. The company's price-to-earnings (P/E) ratio is about 196.11, indicating that investors are paying a premium for its earnings. The price-to-sales ratio is around 6, meaning investors pay $6 for every dollar of sales. These figures suggest that the market has high expectations for Spotify's future growth.

The company's enterprise value to sales ratio is approximately 5.84, reflecting its total valuation in relation to sales. The enterprise value to operating cash flow ratio is around 63.88, which may indicate how the market values Spotify's cash-generating ability. Despite these high valuations, Spotify maintains a moderate debt-to-equity ratio of about 0.31, suggesting a balanced approach to leveraging debt.

Spotify's current ratio stands at approximately 1.56, indicating a good level of liquidity to cover short-term liabilities. Despite the challenges, several analysts have increased their forecasts for Spotify, suggesting a positive outlook for the company's future performance, as reported by Benzinga.

Spotify Technology S.A. (NYSE:SPOT) is a leading music streaming service known for its vast library and personalized playlists. As it prepares to release its quarterly earnings on October 22, 2024, Wall Street analysts predict an earnings per share (EPS) of $1.77 and revenue of around $4.38 billion. This release is highly anticipated, with options traders showing significant interest, suggesting potential stock price movement.

The recent surge in options trading volume for Spotify indicates that traders are positioning for a significant event, possibly linked to the upcoming earnings report. Options trading allows investors to leverage stock movements, but it involves risks like timing and expiration. This heightened activity suggests that investors are expecting a notable change in Spotify's stock price following the earnings announcement.

Spotify's stock has been trending on Zacks.com, with a notable 8.1% increase over the past month, outperforming the Zacks S&P 500 composite's 3.8% rise. This performance underscores Spotify's strong position within the Zacks Technology Services industry, which saw a 7.4% gain. The focus on Spotify's stock is driven by fundamental factors, particularly revisions to earnings estimates, which are crucial in shaping the stock's future direction.

The consensus estimate for Spotify's quarterly earnings is $1.79 per share, slightly above Wall Street's prediction. The actual results could significantly impact Spotify's stock price. If earnings exceed expectations, the stock may rise; if not, it could decline. The sustainability of any price changes will depend on management's discussion of business conditions during the earnings call.

Spotify's financial metrics reveal a high valuation, with a price-to-earnings (P/E) ratio of 149.87 and a price-to-sales ratio of 4.71. The enterprise value to sales ratio is 4.56, and the enterprise value to operating cash flow ratio is 49.93. Despite these high valuations, Spotify maintains a low debt-to-equity ratio of 0.31 and a current ratio of 1.56, indicating good liquidity to cover short-term liabilities.

Spotify (NYSE:SPOT) saw a notable increase of over 13% in its stock price during pre-market today after reporting better-than-anticipated earnings and gross margin for Q2/24.

The streaming giant posted an EPS of €1.33, surpassing the Street forecast of €1.05. However, revenue for the quarter was slightly below expectations, coming in at €3.81 billion compared to the estimated €3.82 billion. Premium revenue was recorded at €3.35 billion, marginally above the €3.34 billion estimate.

The company’s gross margin for the second quarter stood at 29.2%, exceeding the Street estimate of 28.1%.

Monthly active users (MAUs) were reported at 626 million, falling short of the projected 631.46 million. Similarly, ad-supported MAUs were 393 million, below the expected 397.71 million.

For the third quarter of 2024, Spotify forecasts revenue of €4 billion, which is significantly lower than the Street estimate of €4.365 billion.

KeyBanc analysts reiterated an Overweight rating and a $400 price target on Spotify (NYSE:SPOT) stock, highlighting the potential for Spotify's bundles to significantly boost operating profit starting in the third quarter.

The analysts noted that while the key determinant will be the bundle take rates, Spotify will have limited data by the time of its second-quarter earnings report. According to the analysts' calculations, if 50% of subscribers in Australia, the U.K., and the U.S. opt for the bundle, it could result in a 6-12% increase to his above-consensus operating profit forecast for Q3/24.

Overall, the analysts believe that bundles enhance lifetime value (LTV), which should give Spotify the flexibility to invest in growth while also improving profit margins.

Citi analysts increased their price target for Spotify (NYSE:SPOT) to $310 from $255 while maintaining their Neutral rating on the stock. The analysts noted that Spotify's stock has performed well as investors respond positively to cost controls, welcome price increases, and show growing interest in emerging opportunities such as audiobooks, video ads, and education.

While the analysts believe the Street has underestimated Spotify's revenue for 2024, they suggest that the forecasts for 2025 and 2026 may be overly optimistic. The primary discrepancy between their projections and the Street's lies in the expected moderation of premium net additions.