Spotify Technology (NYSE:SPOT) has been navigating a challenging stretch in the market, with shares down over 16% in the past 3 months. Investors are taking stock of Spotify’s fundamentals and recent financial performance to gauge what could come next.
See our latest analysis for Spotify Technology.
Spotify’s share price has given back some recent gains, falling more than 16% over the last three months as investors weighed up future growth and risk. However, the backdrop remains strong with a 27.5% year-to-date price return and a 22.9% total shareholder return over the past year. Momentum appears to be cooling after a breakout period, yet the company’s long-term story is far from finished.
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With shares pulling back sharply while fundamentals remain upbeat, the question now is whether Spotify offers genuine value at these levels or if the market has already factored in all its potential for future growth.
Spotify’s widely followed narrative, according to MichaelP, prices the stock’s fair value notably above its recent close, suggesting there may be more upside for those looking beyond recent volatility. The narrative’s fair value calculation points to an opportunity grounded in long-term cash generation rather than today’s headwinds.
“The market’s obsession with short-term results over long-term results is what led many investors to misunderstand Amazon, Netflix and many others in their early days, and the same is true with Spotify. You’d hear investors say: ‘Yeah, but you aren’t profitable?’ Well, those companies were playing the long game while those investors who only looked a few quarters out missed the boat of companies that had great qualitative metrics that weren’t yet evident in traditional quantitative financial metrics.”
Read the complete narrative.
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Result: Fair Value of $703 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, competition among global streaming platforms and slower-than-expected ad revenue growth could challenge Spotify’s path to sustained margin expansion and dominance.