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2021-04-16

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Spotify: The Company Is Spot On

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{"i18n":{"language":"en_US"},"userPageInfo":{"id":"3581382947171101","uuid":"3581382947171101","gmtCreate":1618288923004,"gmtModify":1618288923004,"name":"lianchuan","pinyin":"lianchuan","introduction":"","introductionEn":null,"signature":"","avatar":"https://static.laohu8.com/default-avatar.jpg","hat":null,"hatId":null,"hatName":null,"vip":1,"status":2,"fanSize":0,"headSize":5,"tweetSize":1,"questionSize":0,"limitLevel":999,"accountStatus":3,"level":{"id":0,"name":"","nameTw":"","represent":"","factor":"","iconColor":"","bgColor":""},"themeCounts":0,"badgeCounts":0,"badges":[],"moderator":false,"superModerator":false,"manageSymbols":null,"badgeLevel":null,"boolIsFan":false,"boolIsHead":false,"favoriteSize":0,"symbols":null,"coverImage":null,"realNameVerified":"success","userBadges":[],"userBadgeCount":0,"currentWearingBadge":null,"individualDisplayBadges":null,"crmLevel":1,"crmLevelSwitch":0,"location":null,"starInvestorFollowerNum":0,"starInvestorFlag":false,"starInvestorOrderShareNum":0,"subscribeStarInvestorNum":0,"ror":null,"winRationPercentage":null,"showRor":false,"investmentPhilosophy":null,"starInvestorSubscribeFlag":false},"baikeInfo":{},"tab":"hot","tweets":[{"id":370951571,"gmtCreate":1618545991793,"gmtModify":1704712532728,"author":{"id":"3581382947171101","authorId":"3581382947171101","name":"lianchuan","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3581382947171101","authorIdStr":"3581382947171101"},"themes":[],"htmlText":"good","listText":"good","text":"good","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/370951571","repostId":"1160547616","repostType":4,"repost":{"id":"1160547616","pubTimestamp":1618538114,"share":"https://ttm.financial/m/news/1160547616?lang=&edition=fundamental","pubTime":"2021-04-16 09:55","market":"us","language":"en","title":"Spotify: The Company Is Spot On","url":"https://stock-news.laohu8.com/highlight/detail?id=1160547616","media":"seekingalpha","summary":"Summary\n\nSpotify delivered quarterly YoY revenue growth of 20%.\nSpotify needs to work on its gross p","content":"<p><b>Summary</b></p>\n<ul>\n <li>Spotify delivered quarterly YoY revenue growth of 20%.</li>\n <li>Spotify needs to work on its gross profit margin, although certain investments are necessary to continue growth.</li>\n <li>Spotify remains a unique entry into the music industry.</li>\n <li>The share price has declined 20% from its high, and this could be a good entry point.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5a719e44377b3cece983f2827e017aca\" tg-width=\"768\" tg-height=\"512\"><span>Photo by Spencer Platt/Getty Images News via Getty Images</span></p>\n<p><b>Investment Thesis</b></p>\n<p>Spotify(NYSE:SPOT)is the stock to buy. Hear me out, return on equity negative 20%, gross profit margin 25%, and EPS will return you $3 in losses. Why would you want to invest? Original content in the forms of podcast and music integration, a great year in 2019 hints that the future can be brighter for Spotify, and the stock is down nearly 20% from its high.</p>\n<p>Spotify has shown that it can deliver good returns as seen in 2019, and it is known to navigate trends quickly. The stock price is now at $287, it could go down further, but this price is a good deal, too. Spotify has zero long-term debt, an improving current ratio, and above all delivered 20% in quarterly YoY revenue growth. What can I say? It must be the content.</p>\n<p><b>Original Content</b></p>\n<p>Spotify has invested a great deal of money in expanding its lineup of original content with podcasts, music content, sports, entertainment, etc. They acquired Anchor in February of 2019 that allows users to create and distribute their podcasts. Spotify has implemented Anchor into their structure by&nbsp;creating music talk shows similar to radio shows, except listeners can interact directly with the shows and add songs to playlists.</p>\n<p>Artists can also create a podcast show using Anchor, implementing their music, which gives them some creative control. In that same month, they also acquired Gimlet Media which produces independent podcast content; in the last two years, more have followed with the acquisitions of Parcast, The Ringer, and&nbsp;Megaphone&nbsp;which works primarily in podcast technology. These investments can only benefit Spotify long term, especially with growing consolidation in the industry.</p>\n<p>Sirius XM&nbsp;(NASDAQ:SIRI)&nbsp;acquired&nbsp;Pandora, Square(NYSE:SQ)bought Tidal,SiriusXM also invested in SoundCloud, and there is still the Apple Music(NASDAQ:AAPL)threat. Props to Spotify for prioritizing content investment now rather than fall behind later. These are instrumental moves that will put Spotify ahead long-term and are crucial in keeping up with the rest of the industry. No one is resting, SiriusXM is moving fast, Apple Music has got a behemoth behind it, and Spotify realizes it also needs to act accordingly.</p>\n<p><b>Numbers and Valuation</b></p>\n<p>Content is expensive, and Spotify invests heavily in original and exclusive content (podcasts and other entertainment propositions). As previously mentioned, this remains an excellent long-term strategy. The consequence of this, the gross profit margin is low. Spotify only delivers about a 25% gross profit margin, and SiriusXM makes a gross profit margin of 55%. Even Netflix(NASDAQ:NFLX)which also has to invest in content delivers 39%. Spotify has deep troubles when it comes to profitability.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d0cd21d3dc45e3fffb17a37b19725a52\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p>Spotify's EPS has rarely turned positive and has remained negative for almost three years now.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b06cc0d94361fd22d734e213cba55406\" tg-width=\"635\" tg-height=\"419\"><span>Data by YCharts</span></p>\n<p>Spotify has the advantage of being one of the few mainstream music distributors in streaming; it needs to successfully utilize its business to generate profits. The company does not offer a dividend, and it often falls into negative returns. In 2019, it was hitting a stride with return on equity in the double digits, but that has once again plunged into misery following 2020.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f7be871ed8500710a12cbc7b907361d2\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p>However, quarterly YoY revenue growth was above 20%: consumers enjoy Spotify, the company has a fixed asset turnover of 10, higher than competitors, and confidence builds in the brand.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8d2cfc69ee6b0ed745e1749868e05a6b\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d4c7214bdeea196fd0c7361603d8fa79\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p>Spotify does have a unique proposition in the music industry, and the current price is well-valued. The price to free cash flow is 266 (which is high, to say the least), but it has a price to book value of 15, lower than other competitors.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f1c99813f0f84ec7a90836cb8fa9b192\" tg-width=\"635\" tg-height=\"436\"><span>Data by YCharts</span></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5f8798e56a4152c259c2d12109fa1938\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p>EPS was -$3 and the current ratio is 0.8. In July of 2019, EPS was positive at around 0.179. Investors may be frustrated at the returns produced by Spotify in 2021, and they are rightfully displeased. However, Spotify has been able to turn profits, and as it invests more in materials such as podcasts, it will have an edge.</p>\n<p>Understandably, it needs to be able to swim with the sharks, pandemic or no pandemic, meaning it needs to have more consistency, but it is still growing and it has the potential to do more. It has a current ratio of 0.8, but this is up from 0.7 in 2019. The company has pivoted fast over the years, and that tenacity will allow it to move higher.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/309a818d1a637ad642ddd33ac3ee35f5\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p><b>Technical Indicators</b></p>\n<p>RSI remains at 47, which marks it as moderately bought, and the price has already declined steeply from a high of $360.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6bd3d1394cc4bff41c850f1e89a6a7ae\" tg-width=\"635\" tg-height=\"403\"><span>Data by YCharts</span></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/87809489d076e3c7c963d7b0b4bccf16\" tg-width=\"635\" tg-height=\"403\"><span>Data by YCharts</span></p>\n<p>This marks a nearly 20% drop for the stock. This is a level not seen since last winter. Based on the chart, the price looks poised to go down further due to the level of the peaks, which is why I would wait. Although gains have been unimpressive this year for Spotify, they were getting closer in 2019, and in the coming years, they can only improve. Spotify is also still a relatively new company, which means more investment than is otherwise required by its peers. We have already seen the potential of Spotify as seen in 2019; it can leverage its advantages in a thriving market.</p>\n<p><b>Conclusion</b></p>\n<p>Spotify has got a great run ahead of it. It is making improvements to the company in terms of original content, and although EPS remained negative, the company is going places. The stock could drop further, and a reasonable buy target would be around $250. That would still mean another 12% drop for the shares, which is less likely.</p>\n<p>However, Spotify is a unique business in the space that could also justify the current price point. Spotify is in a unique position in the music industry as it is the most direct competitor to Apple Music, and its investments in original content can only help the company. Overall, Spotify has had its share of the rollercoaster, but it has a bright future for investors.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Spotify: The Company Is Spot On</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSpotify: The Company Is Spot On\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 09:55 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419330-spotify-company-spot-on><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nSpotify delivered quarterly YoY revenue growth of 20%.\nSpotify needs to work on its gross profit margin, although certain investments are necessary to continue growth.\nSpotify remains a ...</p>\n\n<a href=\"https://seekingalpha.com/article/4419330-spotify-company-spot-on\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SPOT":"Spotify Technology S.A."},"source_url":"https://seekingalpha.com/article/4419330-spotify-company-spot-on","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1160547616","content_text":"Summary\n\nSpotify delivered quarterly YoY revenue growth of 20%.\nSpotify needs to work on its gross profit margin, although certain investments are necessary to continue growth.\nSpotify remains a unique entry into the music industry.\nThe share price has declined 20% from its high, and this could be a good entry point.\n\nPhoto by Spencer Platt/Getty Images News via Getty Images\nInvestment Thesis\nSpotify(NYSE:SPOT)is the stock to buy. Hear me out, return on equity negative 20%, gross profit margin 25%, and EPS will return you $3 in losses. Why would you want to invest? Original content in the forms of podcast and music integration, a great year in 2019 hints that the future can be brighter for Spotify, and the stock is down nearly 20% from its high.\nSpotify has shown that it can deliver good returns as seen in 2019, and it is known to navigate trends quickly. The stock price is now at $287, it could go down further, but this price is a good deal, too. Spotify has zero long-term debt, an improving current ratio, and above all delivered 20% in quarterly YoY revenue growth. What can I say? It must be the content.\nOriginal Content\nSpotify has invested a great deal of money in expanding its lineup of original content with podcasts, music content, sports, entertainment, etc. They acquired Anchor in February of 2019 that allows users to create and distribute their podcasts. Spotify has implemented Anchor into their structure by creating music talk shows similar to radio shows, except listeners can interact directly with the shows and add songs to playlists.\nArtists can also create a podcast show using Anchor, implementing their music, which gives them some creative control. In that same month, they also acquired Gimlet Media which produces independent podcast content; in the last two years, more have followed with the acquisitions of Parcast, The Ringer, and Megaphone which works primarily in podcast technology. These investments can only benefit Spotify long term, especially with growing consolidation in the industry.\nSirius XM (NASDAQ:SIRI) acquired Pandora, Square(NYSE:SQ)bought Tidal,SiriusXM also invested in SoundCloud, and there is still the Apple Music(NASDAQ:AAPL)threat. Props to Spotify for prioritizing content investment now rather than fall behind later. These are instrumental moves that will put Spotify ahead long-term and are crucial in keeping up with the rest of the industry. No one is resting, SiriusXM is moving fast, Apple Music has got a behemoth behind it, and Spotify realizes it also needs to act accordingly.\nNumbers and Valuation\nContent is expensive, and Spotify invests heavily in original and exclusive content (podcasts and other entertainment propositions). As previously mentioned, this remains an excellent long-term strategy. The consequence of this, the gross profit margin is low. Spotify only delivers about a 25% gross profit margin, and SiriusXM makes a gross profit margin of 55%. Even Netflix(NASDAQ:NFLX)which also has to invest in content delivers 39%. Spotify has deep troubles when it comes to profitability.\nData by YCharts\nSpotify's EPS has rarely turned positive and has remained negative for almost three years now.\nData by YCharts\nSpotify has the advantage of being one of the few mainstream music distributors in streaming; it needs to successfully utilize its business to generate profits. The company does not offer a dividend, and it often falls into negative returns. In 2019, it was hitting a stride with return on equity in the double digits, but that has once again plunged into misery following 2020.\nData by YCharts\nHowever, quarterly YoY revenue growth was above 20%: consumers enjoy Spotify, the company has a fixed asset turnover of 10, higher than competitors, and confidence builds in the brand.\nData by YCharts\nData by YCharts\nSpotify does have a unique proposition in the music industry, and the current price is well-valued. The price to free cash flow is 266 (which is high, to say the least), but it has a price to book value of 15, lower than other competitors.\nData by YCharts\nData by YCharts\nEPS was -$3 and the current ratio is 0.8. In July of 2019, EPS was positive at around 0.179. Investors may be frustrated at the returns produced by Spotify in 2021, and they are rightfully displeased. However, Spotify has been able to turn profits, and as it invests more in materials such as podcasts, it will have an edge.\nUnderstandably, it needs to be able to swim with the sharks, pandemic or no pandemic, meaning it needs to have more consistency, but it is still growing and it has the potential to do more. It has a current ratio of 0.8, but this is up from 0.7 in 2019. The company has pivoted fast over the years, and that tenacity will allow it to move higher.\nData by YCharts\nTechnical Indicators\nRSI remains at 47, which marks it as moderately bought, and the price has already declined steeply from a high of $360.\nData by YCharts\nData by YCharts\nThis marks a nearly 20% drop for the stock. This is a level not seen since last winter. Based on the chart, the price looks poised to go down further due to the level of the peaks, which is why I would wait. Although gains have been unimpressive this year for Spotify, they were getting closer in 2019, and in the coming years, they can only improve. Spotify is also still a relatively new company, which means more investment than is otherwise required by its peers. We have already seen the potential of Spotify as seen in 2019; it can leverage its advantages in a thriving market.\nConclusion\nSpotify has got a great run ahead of it. It is making improvements to the company in terms of original content, and although EPS remained negative, the company is going places. The stock could drop further, and a reasonable buy target would be around $250. That would still mean another 12% drop for the shares, which is less likely.\nHowever, Spotify is a unique business in the space that could also justify the current price point. Spotify is in a unique position in the music industry as it is the most direct competitor to Apple Music, and its investments in original content can only help the company. Overall, Spotify has had its share of the rollercoaster, but it has a bright future for investors.","news_type":1},"isVote":1,"tweetType":1,"viewCount":27,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":370951571,"gmtCreate":1618545991793,"gmtModify":1704712532728,"author":{"id":"3581382947171101","authorId":"3581382947171101","name":"lianchuan","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3581382947171101","authorIdStr":"3581382947171101"},"themes":[],"htmlText":"good","listText":"good","text":"good","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/370951571","repostId":"1160547616","repostType":4,"repost":{"id":"1160547616","pubTimestamp":1618538114,"share":"https://ttm.financial/m/news/1160547616?lang=&edition=fundamental","pubTime":"2021-04-16 09:55","market":"us","language":"en","title":"Spotify: The Company Is Spot On","url":"https://stock-news.laohu8.com/highlight/detail?id=1160547616","media":"seekingalpha","summary":"Summary\n\nSpotify delivered quarterly YoY revenue growth of 20%.\nSpotify needs to work on its gross p","content":"<p><b>Summary</b></p>\n<ul>\n <li>Spotify delivered quarterly YoY revenue growth of 20%.</li>\n <li>Spotify needs to work on its gross profit margin, although certain investments are necessary to continue growth.</li>\n <li>Spotify remains a unique entry into the music industry.</li>\n <li>The share price has declined 20% from its high, and this could be a good entry point.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5a719e44377b3cece983f2827e017aca\" tg-width=\"768\" tg-height=\"512\"><span>Photo by Spencer Platt/Getty Images News via Getty Images</span></p>\n<p><b>Investment Thesis</b></p>\n<p>Spotify(NYSE:SPOT)is the stock to buy. Hear me out, return on equity negative 20%, gross profit margin 25%, and EPS will return you $3 in losses. Why would you want to invest? Original content in the forms of podcast and music integration, a great year in 2019 hints that the future can be brighter for Spotify, and the stock is down nearly 20% from its high.</p>\n<p>Spotify has shown that it can deliver good returns as seen in 2019, and it is known to navigate trends quickly. The stock price is now at $287, it could go down further, but this price is a good deal, too. Spotify has zero long-term debt, an improving current ratio, and above all delivered 20% in quarterly YoY revenue growth. What can I say? It must be the content.</p>\n<p><b>Original Content</b></p>\n<p>Spotify has invested a great deal of money in expanding its lineup of original content with podcasts, music content, sports, entertainment, etc. They acquired Anchor in February of 2019 that allows users to create and distribute their podcasts. Spotify has implemented Anchor into their structure by&nbsp;creating music talk shows similar to radio shows, except listeners can interact directly with the shows and add songs to playlists.</p>\n<p>Artists can also create a podcast show using Anchor, implementing their music, which gives them some creative control. In that same month, they also acquired Gimlet Media which produces independent podcast content; in the last two years, more have followed with the acquisitions of Parcast, The Ringer, and&nbsp;Megaphone&nbsp;which works primarily in podcast technology. These investments can only benefit Spotify long term, especially with growing consolidation in the industry.</p>\n<p>Sirius XM&nbsp;(NASDAQ:SIRI)&nbsp;acquired&nbsp;Pandora, Square(NYSE:SQ)bought Tidal,SiriusXM also invested in SoundCloud, and there is still the Apple Music(NASDAQ:AAPL)threat. Props to Spotify for prioritizing content investment now rather than fall behind later. These are instrumental moves that will put Spotify ahead long-term and are crucial in keeping up with the rest of the industry. No one is resting, SiriusXM is moving fast, Apple Music has got a behemoth behind it, and Spotify realizes it also needs to act accordingly.</p>\n<p><b>Numbers and Valuation</b></p>\n<p>Content is expensive, and Spotify invests heavily in original and exclusive content (podcasts and other entertainment propositions). As previously mentioned, this remains an excellent long-term strategy. The consequence of this, the gross profit margin is low. Spotify only delivers about a 25% gross profit margin, and SiriusXM makes a gross profit margin of 55%. Even Netflix(NASDAQ:NFLX)which also has to invest in content delivers 39%. Spotify has deep troubles when it comes to profitability.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d0cd21d3dc45e3fffb17a37b19725a52\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p>Spotify's EPS has rarely turned positive and has remained negative for almost three years now.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b06cc0d94361fd22d734e213cba55406\" tg-width=\"635\" tg-height=\"419\"><span>Data by YCharts</span></p>\n<p>Spotify has the advantage of being one of the few mainstream music distributors in streaming; it needs to successfully utilize its business to generate profits. The company does not offer a dividend, and it often falls into negative returns. In 2019, it was hitting a stride with return on equity in the double digits, but that has once again plunged into misery following 2020.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f7be871ed8500710a12cbc7b907361d2\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p>However, quarterly YoY revenue growth was above 20%: consumers enjoy Spotify, the company has a fixed asset turnover of 10, higher than competitors, and confidence builds in the brand.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8d2cfc69ee6b0ed745e1749868e05a6b\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d4c7214bdeea196fd0c7361603d8fa79\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p>Spotify does have a unique proposition in the music industry, and the current price is well-valued. The price to free cash flow is 266 (which is high, to say the least), but it has a price to book value of 15, lower than other competitors.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f1c99813f0f84ec7a90836cb8fa9b192\" tg-width=\"635\" tg-height=\"436\"><span>Data by YCharts</span></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5f8798e56a4152c259c2d12109fa1938\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p>EPS was -$3 and the current ratio is 0.8. In July of 2019, EPS was positive at around 0.179. Investors may be frustrated at the returns produced by Spotify in 2021, and they are rightfully displeased. However, Spotify has been able to turn profits, and as it invests more in materials such as podcasts, it will have an edge.</p>\n<p>Understandably, it needs to be able to swim with the sharks, pandemic or no pandemic, meaning it needs to have more consistency, but it is still growing and it has the potential to do more. It has a current ratio of 0.8, but this is up from 0.7 in 2019. The company has pivoted fast over the years, and that tenacity will allow it to move higher.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/309a818d1a637ad642ddd33ac3ee35f5\" tg-width=\"635\" tg-height=\"453\"><span>Data by YCharts</span></p>\n<p><b>Technical Indicators</b></p>\n<p>RSI remains at 47, which marks it as moderately bought, and the price has already declined steeply from a high of $360.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/6bd3d1394cc4bff41c850f1e89a6a7ae\" tg-width=\"635\" tg-height=\"403\"><span>Data by YCharts</span></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/87809489d076e3c7c963d7b0b4bccf16\" tg-width=\"635\" tg-height=\"403\"><span>Data by YCharts</span></p>\n<p>This marks a nearly 20% drop for the stock. This is a level not seen since last winter. Based on the chart, the price looks poised to go down further due to the level of the peaks, which is why I would wait. Although gains have been unimpressive this year for Spotify, they were getting closer in 2019, and in the coming years, they can only improve. Spotify is also still a relatively new company, which means more investment than is otherwise required by its peers. We have already seen the potential of Spotify as seen in 2019; it can leverage its advantages in a thriving market.</p>\n<p><b>Conclusion</b></p>\n<p>Spotify has got a great run ahead of it. It is making improvements to the company in terms of original content, and although EPS remained negative, the company is going places. The stock could drop further, and a reasonable buy target would be around $250. That would still mean another 12% drop for the shares, which is less likely.</p>\n<p>However, Spotify is a unique business in the space that could also justify the current price point. Spotify is in a unique position in the music industry as it is the most direct competitor to Apple Music, and its investments in original content can only help the company. Overall, Spotify has had its share of the rollercoaster, but it has a bright future for investors.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Spotify: The Company Is Spot On</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSpotify: The Company Is Spot On\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-16 09:55 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4419330-spotify-company-spot-on><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nSpotify delivered quarterly YoY revenue growth of 20%.\nSpotify needs to work on its gross profit margin, although certain investments are necessary to continue growth.\nSpotify remains a ...</p>\n\n<a href=\"https://seekingalpha.com/article/4419330-spotify-company-spot-on\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SPOT":"Spotify Technology S.A."},"source_url":"https://seekingalpha.com/article/4419330-spotify-company-spot-on","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1160547616","content_text":"Summary\n\nSpotify delivered quarterly YoY revenue growth of 20%.\nSpotify needs to work on its gross profit margin, although certain investments are necessary to continue growth.\nSpotify remains a unique entry into the music industry.\nThe share price has declined 20% from its high, and this could be a good entry point.\n\nPhoto by Spencer Platt/Getty Images News via Getty Images\nInvestment Thesis\nSpotify(NYSE:SPOT)is the stock to buy. Hear me out, return on equity negative 20%, gross profit margin 25%, and EPS will return you $3 in losses. Why would you want to invest? Original content in the forms of podcast and music integration, a great year in 2019 hints that the future can be brighter for Spotify, and the stock is down nearly 20% from its high.\nSpotify has shown that it can deliver good returns as seen in 2019, and it is known to navigate trends quickly. The stock price is now at $287, it could go down further, but this price is a good deal, too. Spotify has zero long-term debt, an improving current ratio, and above all delivered 20% in quarterly YoY revenue growth. What can I say? It must be the content.\nOriginal Content\nSpotify has invested a great deal of money in expanding its lineup of original content with podcasts, music content, sports, entertainment, etc. They acquired Anchor in February of 2019 that allows users to create and distribute their podcasts. Spotify has implemented Anchor into their structure by creating music talk shows similar to radio shows, except listeners can interact directly with the shows and add songs to playlists.\nArtists can also create a podcast show using Anchor, implementing their music, which gives them some creative control. In that same month, they also acquired Gimlet Media which produces independent podcast content; in the last two years, more have followed with the acquisitions of Parcast, The Ringer, and Megaphone which works primarily in podcast technology. These investments can only benefit Spotify long term, especially with growing consolidation in the industry.\nSirius XM (NASDAQ:SIRI) acquired Pandora, Square(NYSE:SQ)bought Tidal,SiriusXM also invested in SoundCloud, and there is still the Apple Music(NASDAQ:AAPL)threat. Props to Spotify for prioritizing content investment now rather than fall behind later. These are instrumental moves that will put Spotify ahead long-term and are crucial in keeping up with the rest of the industry. No one is resting, SiriusXM is moving fast, Apple Music has got a behemoth behind it, and Spotify realizes it also needs to act accordingly.\nNumbers and Valuation\nContent is expensive, and Spotify invests heavily in original and exclusive content (podcasts and other entertainment propositions). As previously mentioned, this remains an excellent long-term strategy. The consequence of this, the gross profit margin is low. Spotify only delivers about a 25% gross profit margin, and SiriusXM makes a gross profit margin of 55%. Even Netflix(NASDAQ:NFLX)which also has to invest in content delivers 39%. Spotify has deep troubles when it comes to profitability.\nData by YCharts\nSpotify's EPS has rarely turned positive and has remained negative for almost three years now.\nData by YCharts\nSpotify has the advantage of being one of the few mainstream music distributors in streaming; it needs to successfully utilize its business to generate profits. The company does not offer a dividend, and it often falls into negative returns. In 2019, it was hitting a stride with return on equity in the double digits, but that has once again plunged into misery following 2020.\nData by YCharts\nHowever, quarterly YoY revenue growth was above 20%: consumers enjoy Spotify, the company has a fixed asset turnover of 10, higher than competitors, and confidence builds in the brand.\nData by YCharts\nData by YCharts\nSpotify does have a unique proposition in the music industry, and the current price is well-valued. The price to free cash flow is 266 (which is high, to say the least), but it has a price to book value of 15, lower than other competitors.\nData by YCharts\nData by YCharts\nEPS was -$3 and the current ratio is 0.8. In July of 2019, EPS was positive at around 0.179. Investors may be frustrated at the returns produced by Spotify in 2021, and they are rightfully displeased. However, Spotify has been able to turn profits, and as it invests more in materials such as podcasts, it will have an edge.\nUnderstandably, it needs to be able to swim with the sharks, pandemic or no pandemic, meaning it needs to have more consistency, but it is still growing and it has the potential to do more. It has a current ratio of 0.8, but this is up from 0.7 in 2019. The company has pivoted fast over the years, and that tenacity will allow it to move higher.\nData by YCharts\nTechnical Indicators\nRSI remains at 47, which marks it as moderately bought, and the price has already declined steeply from a high of $360.\nData by YCharts\nData by YCharts\nThis marks a nearly 20% drop for the stock. This is a level not seen since last winter. Based on the chart, the price looks poised to go down further due to the level of the peaks, which is why I would wait. Although gains have been unimpressive this year for Spotify, they were getting closer in 2019, and in the coming years, they can only improve. Spotify is also still a relatively new company, which means more investment than is otherwise required by its peers. We have already seen the potential of Spotify as seen in 2019; it can leverage its advantages in a thriving market.\nConclusion\nSpotify has got a great run ahead of it. It is making improvements to the company in terms of original content, and although EPS remained negative, the company is going places. The stock could drop further, and a reasonable buy target would be around $250. That would still mean another 12% drop for the shares, which is less likely.\nHowever, Spotify is a unique business in the space that could also justify the current price point. Spotify is in a unique position in the music industry as it is the most direct competitor to Apple Music, and its investments in original content can only help the company. Overall, Spotify has had its share of the rollercoaster, but it has a bright future for investors.","news_type":1},"isVote":1,"tweetType":1,"viewCount":27,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}