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Thursday, October 22, 2020

Spotify Technology S.A. (NYSE:SPOT) on the Path to Profitability

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Spotify Technology S.A. (SPOT) shares are trading at higher $266.95 and the avg recommendation for the stock is Moderate Buy, while the current analyst price target stands at $262.97.

To add more color to this target, the company’s high over the last year is $299.67 and the low is $109.18. Over the last 52 weeks, SPOT is up 131.79% while the S&P 500 is up 18.31%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, SPOT reported a profit of $527.43 million. Spotify Technology S.A. also saw revenues increase to $2.08 billion. In addition, SPOT has free cash flow of $4.4 million as of 06-2020. The company’s EBITDA came in at -$153.11 million which compares well with its peers.

SPOT booked profit margins of -4.40%, its Return on Equity (ROE) is -15.90%, and its Return on Assets is -6.20%. All told, it is clear that, SPOT needs to be on your watchlist.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. SPOT has a short ratio of 1.64 and outstanding shares of 186.55M.

Company Outlook

SPOT has seen increased volume after this news and investors are putting their support behind the value proposition. Traders will also note the company’s earnings per share came in at -2.08. Spotify Technology S.A. SPOT also noted assets of $6.09 billion at the end of the last quarter. Investors should also keep an eye on sector updates as SPOT has historically followed its peers on positive news.

All told, Spotify Technology S.A. SPOT has strung together solid data and demonstrated underlying fundamentals. At its current valuation, SPOT represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

Spotify Technology S.A. SPOT is now commanding a market cap of 49.97B and a float of 131.65M. SPOT is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of SPOT stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in SPOT, either long or short, and we have not been compensated for this article.

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