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.

Shares of Spotify (NYSE:SPOT) soared over 14% intra-day today following the audio streaming giant's announcement of fiscal Q1/24 results that exceeded expectations for earnings, revenue, and gross margins.

Spotify disclosed earnings per share of EUR 0.97, surpassing the anticipated EUR 0.64. The company's revenue reached EUR 3.64 billion for the quarter, edging above the forecasted EUR 3.61 billion. Premium revenue alone amounted to EUR 3.25 billion, ahead of the expected EUR 3.22 billion.

In user metrics, Spotify's monthly active users (MAUs) totaled 615 million, slightly below the predicted 617.89 million. Premium subscribers reached 239 million, narrowly missing the forecast of 239.26 million. Spotify particularly excelled with a gross margin of 27.6%, outperforming the expected 26.5%.

For the upcoming second quarter, Spotify projects revenue of EUR 3.8 billion, slightly trailing the consensus estimate of EUR 3.85 billion. The company anticipates MAUs to rise to 631 million and premium subscribers to increase to 245 million, both figures slightly below expectations.

Additionally, Spotify forecasts a second-quarter gross margin of 28.1%, surpassing analyst expectations of 26.7%.

JPMorgan analysts increased their price target on Spotify (NYSE:SPOT) to $320 from $280 while maintaining an Overweight rating. The analysts are optimistic about Spotify's performance going into the first quarter earnings, expecting the company to accelerate revenue growth, expand gross and operating margins, and significantly boost free cash flow in 2024.

Spotify started the year on a strong note with growth in users and subscribers, leading to a forecast of 82 million net adds for monthly active users and 27 million for premium subscribers in 2024. With podcasts gross margins nearing breakeven and anticipated to turn positive in 2024 due to ad revenue growth and content optimization, Spotify is expected to see gross margin expansion. This, coupled with ramping Marketplace contributions, other revenue cost leverage, and strong ad revenue growth, is anticipated to drive improvements in operating and net income, along with significant free cash flow growth in 2024.

Ahead of first-quarter earnings, scheduled for April 23, JPMorgan slightly adjusted the forecasts for monthly active users and premium subscribers to be about 1 million above Spotify's guidance, with expected counts of 619 million and 240 million, respectively. The 2024 revenue growth projection stands at +17% year-over-year on a constant currency basis, balanced across subscriber growth and average revenue per user increase.