Spotify Technology (SPOT) just kicked off its 2025 Wrapped campaign, turning year end listening habits into a global event that now includes real time social features like Wrapped Party and offline pop up experiences.
See our latest analysis for Spotify Technology.
All of this lands while investors are processing bigger shifts, from Spotify’s push into video and AI driven efficiency to Daniel Ek’s planned move to executive chairman. The 23.4% year to date share price return and three year total shareholder return of 622.7% suggest longer term momentum remains intact despite a softer recent patch.
If Spotify’s Wrapped has you thinking about what else is shaping digital media, it could be a good time to scan other high growth tech and AI stocks that are gaining traction.
With revenue and profits inflecting higher, a lower than industry P E multiple, and a double digit discount to analyst targets, is Spotify still misunderstood by the market or are investors already paying up for years of future growth?
According to MichaelP, the narrative fair value for Spotify sits well above the last close, framing today’s price as a potential long term entry point.
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?”. 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.
Curious how this story gets to a much higher valuation from here? The secret mix: rapid earnings expansion, fuller margins, and a punchy future multiple. Want the full blueprint?
Result: Fair Value of $703.12 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, sustained underperformance in ads or rivals chipping away at Spotify’s market share could delay margin expansion and challenge today’s undervaluation thesis.
Find out about the key risks to this Spotify Technology narrative.
Step away from narrative fair value and the current earnings multiple tells a tougher story. Spotify trades at about 71 times earnings, roughly triple the US Entertainment sector at 22 times and more than double its own fair ratio of 34.7 times. This implies far less margin for error if growth slows or sentiment turns.