Cantor Fitzgerald has revised its price target for Spotify (SPOT, Financial), increasing it from $520 to $610, while maintaining a Neutral rating on the stock. According to their analysis, Spotify's first-quarter outcomes were mostly aligned with expectations. However, operating income fell short by 2% compared to previous market predictions, primarily attributed to additional social expenses.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 36 analysts, the average target price for Spotify Technology SA (SPOT, Financial) is $640.83 with a high estimate of $799.05 and a low estimate of $378.07. The average target implies an upside of 11.07% from the current price of $576.94. More detailed estimate data can be found on the Spotify Technology SA (SPOT) Forecast page.
Based on the consensus recommendation from 39 brokerage firms, Spotify Technology SA's (SPOT, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Spotify Technology SA (SPOT, Financial) in one year is $250.58, suggesting a downside of 56.57% from the current price of $576.94. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Spotify Technology SA (SPOT) Summary page.
SPOT Key Business Developments
Release Date: April 29, 2025
- Total Revenue: EUR4.2 billion, 15% year-on-year growth on a constant currency basis.
- Premium Revenue: 16% year-on-year growth on a constant currency basis.
- Advertising Revenue Growth: 5% year-on-year on a currency-neutral basis.
- Gross Margin: 31.6%, surpassing guidance by approximately 10 basis points and expanding about 400 basis points year-on-year.
- Operating Income: EUR509 million, impacted by EUR76 million in social charges.
- Free Cash Flow: EUR534 million.
- Cash and Short-term Investments: EUR8 billion.
- Monthly Active Users (MAU): 678 million, an increase of 3 million.
- Subscribers: 268 million, up 12% year-on-year with a net addition of 5 million.
- Q2 Revenue Forecast: EUR4.3 billion.
- Q2 Gross Margin Forecast: 31.5%.
- Q2 Operating Income Forecast: EUR539 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Spotify Technology SA (SPOT, Financial) reported strong subscriber growth, with the highest Q1 net adds since 2020, driven significantly by emerging markets.
- The company achieved a 15% year-on-year revenue growth on a constant currency basis, with premium revenue rising 16% due to subscriber growth and ARPU gains.
- Spotify's gross margin improved to 31.6%, surpassing guidance and expanding by 400 basis points year-on-year.
- The Spotify Partner Program has been successful, paying out over $100 million to podcast creators in Q1, and expanding to nine new markets.
- Spotify continues to innovate rapidly, reducing the time to roll out new features across devices and expanding its offerings in video podcasts and audiobooks.
Negative Points
- The macroeconomic environment remains uncertain, which could potentially impact Spotify Technology SA (SPOT) if extreme conditions arise.
- Advertising revenue growth was modest at 5% year-on-year, with some softness in advertising pricing noted.
- Operating income was impacted by higher-than-forecasted social charges, which were EUR 58 million above expectations.
- The company faces challenges in maintaining MAU growth, with Q1 growth being softer due to seasonality and the impact of Wrapped.
- There is a need for alignment and support from industry partners to offer new experiences, which could delay the introduction of higher-tier subscription offerings.
