US Stock Earnings Preview: Spotify's Earnings Report is Coming! Is This the Best Time to Buy?

Spotify is set to release its earnings report on February 4th, Eastern Time in the United States.

 

In 2024, Spotify achieved remarkable results. Its stock price saw a return of 138% throughout the year.

 

The surge in the number of listeners on the audio streaming platform, including strong demand for premium subscriptions, drove record-breaking profits, which served as a catalyst for the stock's rise.

 

According to the general market view, analysts expect Spotify's fourth-quarter revenue to be 4.26 billion euros, a 17% increase compared to 2023. At the same time, as the company better manages costs and continues to earn more profit from each user, the gross profit margin is expected to increase further.

 

Considering the present stock price, Spotify does not appear to be inexpensive. However, from the perspective of Spotify's stock price candlestick chart in 2024, there were no significant pullbacks throughout the year.

 

It has been steadily climbing.

 

Despite its high current stock price, I don't think it has a high valuation that doesn't match the stock price like some tech giants. First of all, they are growing rapidly.

 

Revenue in the third quarter of 2024 increased by 19% year-on-year. This is not the level that companies worthy of low multiples can achieve. Secondly, their gross profit margin reached 31.1%, the best level ever.

 

This is important because it shows that they are expanding in scale and operating their business more efficiently. So, although the current stock price may seem expensive, they have earned a premium through improved operational methods.

 

Regarding its free cash flow, Spotify's free cash flow in the previous quarter was 711 million euros. This is a substantial amount, demonstrating that they can generate cash while growing.

 

Finally, if you consider the long-term perspective, you can't say it's overvalued. Spotify is a leader in its field; they are taking all the right actions, and they possess a vast amount of music copyrights and resources, and have shown a trend of monopolization in this field.

 

They have huge growth potential. If you believe in their development direction, it's worth paying a little more now.

 

It should be noted that in 2024, many investors were waiting for its price to pull back, but its upward momentum remained strong, leaving many people unable to get on board in the end.

When observing the candlestick chart, we can see that in 2024, Spotify had several instances of gap-up openings, and these happened to coincide exactly with the time nodes of its earnings report releases.

 

So, would you buy Spotify in advance this time? Or would you wait a little longer?$SPOT