Is Spotify ($SPOT) - Good Price Or Good Company Or No ?
My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
"Why not both" I asked myself ?
Wouldn't there be more upsides comparatively speaking ?
Having put the theory to test on (1) Meta Platform, Snap, (2) Visa & Mastercard (3) Tesla, General Motors (4) Netflix (5) AMD, Lam Research, Intel and (6) Apple; time to try it on an Online Music stock no ?
Gonna put $Spotify Technology S.A.(SPOT)$ to the test & see if it fits the bill.
Sidetrack: Below are stocks that I have covered.
Interested ? Click to read. Please "Like" to show some love okie ? Thanks !
- A Swedish proprietary audio streaming & media services provider
- Founded on 23 Apr 2006
- Founders were Daniel Ek & Martin Lorentzon.
- Listed on NYSE on 03 Apr 2018 at $132 per share
- It is one of the largest music streaming service providers
- It has > 100 Million songs & 5 Million podcasts, from record labels & media companies.
- As a "freemium" service, basic features are free with advertisements & limited control,
- Additional features eg offline listening, commercial-free listening, are offered via paid subscriptions.
- It is available in most of Europe, Africa, Americas, Asia and Oceania, with a total availability in 184 markets.
- It has no presence in Mainland China, dominated by QQ Music.
In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did SPOTIFY fare ?
Current stock price < 07 Feb 2022 stock price by -29.35%. Mmm...
Spotify - Summary
- Revenue came in at EUR$3.17 Billion vs EUR$3.16 Billion (expected by Refinitiv analysts) vs EUR$2.69 Billion (Q4 2021) thats a +17.84% gain, according to Refinitiv
- Net loss stood at -EUR$270 Million vs -EUR$39 Million (Q4 2021)
- Loss per share was -EUR$1.40 vs -EUR$0.21 (Q4 2021); thats a -666.67% decline.
- Operating loss was -EUR231 Million vs -EUR7 Million (Q4 2021); thats a -3,300% decline
Spotify - Revenue by Component type and Revenue mix
- As could be seen, Spotify's main revenue source is from its Premium Service offering; contributing the lion's share of revenue at 85.8%
- Secondarily, remaining revenue is from Advertisement support
- For Q4 2022, both revenue source grew at +18% and +14% respectively
Spotify - Revenue Component breakdown
- Above diagram is another look at Revenue Components (Premium & Ad Supported) based on its constituent quarters from 2020 to 2022
Spotify - Monthly Active users (MAU) vs Premium subscribers
- As with any company providing apps services online, one of company's assets / cash cow would be its users' base.
- In terms of Monthly Active users at 489 Million vs 406 (Q4 2021); thats a +20.44% gain
- As for paid subscribers at 205 Million vs 180 Million (Q4 2021); thats a +13.88YoY gain
- Ability to grow its customers' base both organically or inorganically is good news to investors and Wall St analysts whose price forecasts are based on future earnings / prospects
Spotify - Other highlights
Spotify - Gross Margin breakdown by quarters
- Spotify's Gross Margin came in at 25.4% vs 27% (Q4 2021); thats a -1.6% decline
- The decline could be attributed to both of Spotify's revenue components of (a) Premium services and (b) Ad-supported service.
- Free Cash Flow (FCF) was -EUR$73 million, a decrease Y/Y as a result of lower Net Income adjusted for non-cash items and reduced favorability in net working capital.
Spotify's CEO on Q4 2022 Results
Looking back on 2022 in its entirety, we are pleased with our overall results. Each year presents certain challenges and opportunities and, over the past 12 months, we largely delivered on our internal goals and we are excited about the momentum we are building heading into 2023... Spotify, CEO, Daniel Ek
.
Is Spotify - Both A Good Price and Good Company ?
- For starters, (1) its revenue beat forecast & Q4 2021 results, (2) its MAU is uppped +20% and (3) its paid subscribers of 205 Million is upped +14% from a year ago.
- Just to note, its Q4 2022's MAU of 33 Million net additions to monthly active users during the quarter, marking a record high for the company
- Like other US Tech firms, Spotify's workforce has seen a reduction too. It announced plans to cut 6% (approx. 600 staff) of its global workforceas
- The "gloomy" economic environment (worldwide) has caused consumers & advertisers to limit their spending.
- One of Spotify's continual investment would be its podcasts, where it has spent > $1 Billion over the past 4 years
Spotify - Activities in 2023
- Spotify is certainly on the right path & direction in its continuous effort to enthrall and entrench its customers whether when (a) using the App or (b) listening to its podcasts
- Do you think Spotify is both a good company and at a good price now ?
- Do you think Spotify would be able to reach out and grow its customers' base in 2023 ?
Please "Like" the post ok. Thanks. The rating is very important to me.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Tks for reading my post.
Pls "LIKe" it ok. Tks.
The rating is very important to me. Tks tks!!