Investing in Spotify Technology – A Concise Introduction

By Tamara Parker • Sunday, December 03 15:47 • Permanent Link

Spotify Technology shares fell by -2.4% during the day's afternoon session, and are now trading at a price of $180.69. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

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Spotify Technology S.A., together with its subsidiaries, provides audio streaming services worldwide. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of None and an average price to book (P/B) ratio of None. In contrast, Spotify Technology has a trailing 12 month P/E ratio of -43.9 and a P/B ratio of 16.48.

When we divideSpotify Technology's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.4, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.

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The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.