Spotify Technology S.A. (SPOT) has rewritten the melody of the music industry, emerging as the reigning monarch of the streaming realm amidst the harmonious cacophony of Apple, Amazon, and Alphabet. Boasting a crescendo of 615 million monthly active users in the last quarter, marking a harmonious 19% year-over-year escalation, Spotify’s symphony continues to enthrall listeners.
Spotify’s Bullish Basics
Since its inception in 2008, Spotify pioneered the paid streaming music landscape, orchestrating a symphonic revolution akin to Netflix’s paradigm-altering impact on television and film. Emerging as an orchestral virtuoso despite the cacophony of rivals, Spotify orchestrated a crescendo in revenue, almost doubling between 2019 and 2023.
Spotify’s aria of success reached a crescendo in the first quarter of 2024, with 615 million monthly active users across 184 markets. Premium Subscribers soared by 14% to 239 million, conducting an 84% increase from Q1 FY20 to Q1 FY24, resonating with robust growth. The crescendo was further accentuated by a harmonious price hike in 2024, allowing Spotify to reach euphonic efficiency levels.
Growth Outlook
Last quarter saw Spotify hitting a high note, crescendoing revenue by 21% and orchestrating a resounding tune from an adjusted loss to a profitable symphony at +$1.05 per share, exceeding expectations. With adjusted earnings sky-rocketing by 723% for FY24 and 215% for FY25, Spotify’s composition is promising, earning the prestigious Zacks Rank #1 (Strong Buy).
According to Zacks estimates, Spotify is poised to crescendo its sales by 18% in 2024, further harmonizing with a 15% rise in the following year, crescendoing revenue from approximately $14 billion in FY23 to almost $20 billion by FY25, underscoring a melodious doubling of revenue within five years.
Performance, Technical Levels, and Valuation
Spotify’s stock jubilantly leaped around 100% since its 2018 IPO, although trailing behind the Zacks Tech sector’s impressive 190% surge. The grandiose crescendo saw Spotify shares soaring about 300% from their 2022 lows, harmonizing with a 55% year-to-date surge, outshining tech behemoths Apple, Amazon, and Alphabet in the process.
Despite a recent discordant note in the market, with Spotify trading below its 21-day and 50-day moving averages, exhibiting some of its most oversold RSI levels in recent history, Spotify’s symphony continues to echo with promise, resonating with the allure of a melodious growth story.
Unveiling Investment Prospects in Spotify Technology (SPOT)
Charting the Financial Landscape
Spotify Technology has emerged as an intriguing investment avenue, capturing investors’ attention with its recent performance. Over the last five years, any retracement to SPOT’s 200-day moving average, currently at $240, could present an enticing buying opportunity.
The company is presently trading at 48.1 times its forward 12-month earnings, positioning itself as a reasonably valued asset. Although by no means inexpensive, it is vital to note that Spotify has seen price-to-earnings ratios as high as 175 over the last year. Furthermore, SPOT’s PEG ratio stands at 0.6, embodying a 67% discount in comparison to the Tech sector.
Insights into Investment Potential
Despite its recent downturn, Spotify Technology is gearing up to potentially break out in the upcoming weeks, particularly if it can deliver robust guidance to Wall Street on Tuesday, July 23. This strategic move could position SPOT stock favorably in the eyes of investors.