It's been a great afternoon session for Spotify Technology investors, who saw their shares rise 4.2% to a price of $736.87 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Spotify Technology's Valuation Is in Line With Its Sector Averages:
Spotify Technology S.A., together with its subsidiaries, provides audio streaming subscription services worldwide. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 20.93 and an average price to book (P/B) ratio of 2.93. In contrast, Spotify Technology has a trailing 12 month P/E ratio of 162.7 and a P/B ratio of 22.88.
Spotify Technology has moved 96.3% over the last year compared to 15.5% for the S&P 500 — a difference of 80.8%. Spotify Technology has a 52 week high of $785.0 and a 52 week low of $348.96.
Generally Positive Cash Flows but Slimmer Gross Margins than the Industry Average of 36.5%:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $6,764 | $7,880 | $9,668 | $11,727 | $13,247 | $15,673 |
| Gross Margins | 25% | 26% | 27% | 25% | 26% | 30% |
| Net Margins | -3% | -7% | 0% | -4% | -4% | 7% |
| Net Income (M) | -$186 | -$581 | -$34 | -$430 | -$532 | $1,138 |
| Net Interest Expense (M) | -$58 | -$416 | $155 | $289 | -$59 | -$24 |
| Diluted Shares (M) | 184 | 190 | 192 | 193 | 197 | 204 |
| Earnings Per Share | -$1.03 | -$3.1 | -$1.03 | -$2.93 | -$2.73 | $5.5 |
| EPS Growth | n/a | -200.97% | 66.77% | -184.47% | 6.83% | 301.47% |
| Avg. Price | $138.23 | $214.1 | $262.3 | $140.21 | $187.91 | $739.2 |
| P/E Ratio | -134.2 | -69.06 | -1457.22 | -62.87 | -68.83 | 130.37 |
| Free Cash Flow (M) | $573 | $259 | $361 | $46 | $680 | $2,301 |
| Current Ratio | 0.91 | 0.82 | 1.36 | 1.24 | 1.29 | 1.88 |
Spotify Technology has generally positive cash flows, a strong EPS growth trend, and a decent current ratio of 1.88. However, the firm has slimmer gross margins than its peers.
