Latest news with #SpotifyTechnology
Globe and Mail
21 hours ago
- Business
- Globe and Mail
Spotify's Q1 Profitability Takes Off: What's the Secret Sauce?
Spotify Technology S.A. 's SPOT first-quarter 2025 profitability was top-tier, driven by robust top-line growth and disciplined expense management. Revenues increased 15% year over year in the quarter, driven by a combination of factors, including continued subscriber growth, average revenues per user gains associated with the price surge, growth in impression sales and automated sales channels. This striking top-line growth translated successfully into a gross margin expansion of 400 basis points (bps) from the year-ago quarter to 31.6%. Solid growth across Spotify's Premium and Ad-Supported segments aided this expansion. The premium gross margin was up 332 bps year over year, fueled by rising demand for audiobooks and music. Ad-Supported gross margin expanded 885 bps from the year-ago quarter, driven by strong podcast ad sales and content cost management. Spotify's success at curbing operating expenses by 3% year over year (at constant currency) in the first quarter of 2025 provided a head start in reaching its profitability position. The company managed to do so by reducing its marketing expenses, and cutting off personnel and related expenses. The impacts of increasing revenues, gross margin expansion and a decline in operating expenses drove SPOT's operating margin. In the first quarter of 2025, Spotify's record-high operating income skyrocketed 203% from the year-ago quarter, resulting in an operating margin expansion of a whopping 750 bps. In essence, SPOT's success is a textbook example of how improving the efficiency of core operations and controlling overhead expenses can fuel significant operating income growth, thereby boosting the company's profitability in the quarter. SPOT's Profitability Comparison With AAPL & AMZN There is no denying that Spotify's profitability position was impressive in the first quarter of 2025. However, it lagged its competitors, Apple AAPL and Amazon AMZN, in terms of return on equity (ROE). Spotify's ROE was 22.5%, lower than Apple's 167.2% and Amazon's 24.1%. In terms of return on invested capital (ROIC), Spotify stood at 24%, outpacing Amazon's 15.7% while lagging Apple's 43.9%. Spotify's Price Performance, Valuation & Estimates The SPOT stock has skyrocketed 129.2% in the past year, significantly outperforming the industry 's 37.6% rally and the 10.6% rise of the Zacks S&P 500 composite. 1-Year Price Performance Image Source: Zacks Investment Research From a valuation standpoint, SPOT trades at a forward price-to-earnings ratio of 60.15, above the industry's 39.66. It carries a Value Score of F. The Zacks Consensus Estimate for Spotify's earnings for 2025 is pegged at $9.26 per share, implying a 55.6% growth year over year. SPOT currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Only $1 to See All Zacks' Buys and Sells We're not kidding. Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone. See Stocks Now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Spotify Technology (SPOT): Free Stock Analysis Report
Yahoo
09-06-2025
- Business
- Yahoo
This Monster Streaming Stock Has Quietly Crushed Netflix in 2025. Could a Stock Split Be on the Horizon?
Streaming stocks have held up well in a turbulent market given they are not directly exposed to tariffs. Music streamer Spotify has crushed the S&P 500 and Nasdaq Composite so far this year. Spotify is trading near all-time highs, making it sensible for the company to consider a stock split. 10 stocks we like better than Spotify Technology › By now, my hunch is that you've caught on to some of the major things influencing the stock market this year. As a refresher, mixed economic data, uncertainty surrounding policies from the Federal Reserve, and of course President Donald Trump's tariff agenda have combined to make a series of clouds shading what direction the markets might move next. But even amid all of this uncertainty, some industries have proven resilient throughout the year. Within the broader technology sector -- which itself has had a tough year so far -- the communication services industry has held up relatively well. If you're unfamiliar with communication services, these are businesses that touch areas such as advertising, entertainment, and internet content consumption. When you think about these categories, my guess is your mind rushes straight to Netflix -- and for good reason. As of the closing bell on June 5, shares of Netflix have gained 40% so far this year. That absolutely crushes the breakeven returns of the S&P 500 and Nasdaq Composite. While Netflix remains a quality business, there is another streaming stock that has been quietly outperforming the competition. With shares up nearly 60% year to date, Spotify Technology (NYSE: SPOT) might be a company to put on your radar. Below, I'll detail why streaming stocks have outperformed the broader market this year. From there, I'll cover why I think Spotify could be Wall Street's next big stock-split stock and explain how this process works for investors. Perhaps the biggest factor weighing on growth stocks at the moment is how President Trump's tariff policies will shake out. Tariffs are taxes that are placed on goods imported or exported from the country. Usually, tariffs are used as a negotiation tactic in order to change policies with trade partners. While there can be strategic value to implementing tariffs, they can also lead to periods of higher costs (inflation) for businesses. Unlike many companies in the technology landscape, streaming businesses don't have much to worry about when it comes to tariffs. For the most part, streamers rely on the consumption of digital content such as movies, television, music, or audiobooks. Given these companies don't have much in the way of physical manufacturing or rely on imported or exported goods, streaming is a relatively tariff-resistant business -- making them particularly attractive investments right now. The chart below illustrates Spotify's stock price since its initial public offering (IPO). As investors can see, shares of the streaming giant are hovering near all-time highs. Sometimes when a stock price starts to rise in an exponential fashion, investors will shy away from buying. Said another way, a high share price can be perceived as an expensive stock and investors will begin looking for alternatives. Considering that Spotify has never split its stock, combined with its climbing share price, I see the company as an interesting stock-split candidate. Stock splits are a simple form of financial engineering. For argument's sake, let's say Spotify announced a 10-for-1 stock-split. How would this work? Essentially, Spotify's share price of $710 would be split tenfold. In other words, Spotify's split-adjusted stock price would be about $71. At the same time, however, the company's outstanding shares would rise by tenfold. Given the stock price and the outstanding shares change by the same multiple, the market capitalization of Spotify would remain unchanged. If the valuation of the company doesn't change, what is the point of a stock split? As I alluded to above, when share prices go higher investors often perceive the stock as expensive -- regardless of what valuation multiples might suggest. Given a stock split results in a seemingly lower (or less expensive) share price, they often result in a new cohort of investors pouring in and buying the stock. Ironically, this activity can actually fuel the market cap of the company higher on a post-split basis. This means that even if you own more shares at what appears to be a lower share price following a split, you might actually be investing in the company at a higher valuation. With that in mind, let's explore whether Spotify is a good stock to buy right now -- regardless of whether or not the company chooses to split its stock. Per the comparable company analysis pictured above, Spotify trades at a notable premium compared to other streaming and entertainment companies on a forward earnings basis. In my view, Spotify is a pricey stock right now and the current momentum in share price has led to some notable valuation expansion. Normally, I would not chase at these levels -- as I'd view the stock as overvalued. However, given how sensitive the capital markets are right now on the tariff rhetoric and Spotify's proven resiliency in this environment, I'd consider scooping up shares on any dips that might occur. In the long run, I see Spotify as a best-in-class opportunity in the streaming landscape and a stock deserving of a premium. Before you buy stock in Spotify Technology, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Spotify Technology wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Spotify Technology. The Motley Fool has a disclosure policy. This Monster Streaming Stock Has Quietly Crushed Netflix in 2025. Could a Stock Split Be on the Horizon? was originally published by The Motley Fool
Yahoo
06-06-2025
- Business
- Yahoo
Spotify Technology (NYSE:SPOT) Reports Sales Growth to €4.2 Billion
Spotify Technology saw its share price rise by nearly 34% over the last quarter. The major catalyst was the company's announcement of strong first-quarter earnings, reporting sales growth to EUR 4.19 billion and an increase in net income and earnings per share. This positive financial performance reinforced investor sentiment amidst robust market conditions, where major indices such as the S&P 500 have also posted gains. Spotify's confirmed revenue guidance for the upcoming quarter aligned well with overall market optimism, further supporting its share price growth, while its stagnant buyback activity had little effect on counterbalancing these upward movements. Buy, Hold or Sell Spotify Technology? View our complete analysis and fair value estimate and you decide. We've found 20 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. The recent announcement of Spotify Technology's strong first-quarter earnings, reflecting sales growth to €4.19 billion, has reinforced its positive growth narrative. This signals potential revenue expansion as subscription growth in markets like Latin America and Asia Pacific continues. The company's focus on enhancing user engagement through AI, new monetization systems, and scaling product features could further bolster its earnings potential amid current market optimism. Over the longer term, Spotify's total shareholder return reached a very large value of 536.84% over three years, reflecting steady growth and investor confidence. When comparing its performance to the broader market or the entertainment industry over the last year, Spotify's one-year return exceeded the US Entertainment industry's return of 62% and surpassed the US Market's 11% return. This underscores its strength in navigating challenging market conditions. The positive market sentiment and strong financial performance could influence revenue and earnings forecasts. Analysts project substantial annual earnings growth of 25.4% over the next three years. The share price increase, in context to the consensus price target of US$666.48, suggests room for potential growth given the current share price of US$576.94 being 13.4% below the target. However, variance in analyst projections indicates varying expectations, emphasizing the importance of personal analysis aligned with individual expectations. Examine Spotify Technology's earnings growth report to understand how analysts expect it to perform. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NYSE:SPOT. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@
Yahoo
06-06-2025
- Business
- Yahoo
Spotify Technology (NYSE:SPOT) Reports Sales Growth to €4.2 Billion
Spotify Technology saw its share price rise by nearly 34% over the last quarter. The major catalyst was the company's announcement of strong first-quarter earnings, reporting sales growth to EUR 4.19 billion and an increase in net income and earnings per share. This positive financial performance reinforced investor sentiment amidst robust market conditions, where major indices such as the S&P 500 have also posted gains. Spotify's confirmed revenue guidance for the upcoming quarter aligned well with overall market optimism, further supporting its share price growth, while its stagnant buyback activity had little effect on counterbalancing these upward movements. Buy, Hold or Sell Spotify Technology? View our complete analysis and fair value estimate and you decide. We've found 20 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. The recent announcement of Spotify Technology's strong first-quarter earnings, reflecting sales growth to €4.19 billion, has reinforced its positive growth narrative. This signals potential revenue expansion as subscription growth in markets like Latin America and Asia Pacific continues. The company's focus on enhancing user engagement through AI, new monetization systems, and scaling product features could further bolster its earnings potential amid current market optimism. Over the longer term, Spotify's total shareholder return reached a very large value of 536.84% over three years, reflecting steady growth and investor confidence. When comparing its performance to the broader market or the entertainment industry over the last year, Spotify's one-year return exceeded the US Entertainment industry's return of 62% and surpassed the US Market's 11% return. This underscores its strength in navigating challenging market conditions. The positive market sentiment and strong financial performance could influence revenue and earnings forecasts. Analysts project substantial annual earnings growth of 25.4% over the next three years. The share price increase, in context to the consensus price target of US$666.48, suggests room for potential growth given the current share price of US$576.94 being 13.4% below the target. However, variance in analyst projections indicates varying expectations, emphasizing the importance of personal analysis aligned with individual expectations. Examine Spotify Technology's earnings growth report to understand how analysts expect it to perform. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NYSE:SPOT. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@
Globe and Mail
04-06-2025
- Business
- Globe and Mail
2 Top Tech Stocks to Buy Right Now
After a very tough start to the year, tech sector stocks are back. The tech-heavy Nasdaq Composite index dipped as much as 24% from highs set earlier this year. However, in recent weeks, the index has rallied significantly, erasing nearly all of those losses and pulling back to even for 2025. Given this market recovery, those looking to invest in tech stocks are now wondering what stocks are worth considering when the market is trading near all-time highs. There are two tech stocks that I would strongly consider right now. Here's why. 1. Spotify Technology Firstup is Spotify Technology (NYSE: SPOT). As of this writing, Spotify stock is up 50% year to date, making it one of the top-performing stocks so far in 2025. Indeed, over the last three years, Spotify is up more than 477%. What's behind this excellent performance? And why do I think the stock will continue to beat the market? There are three main reasons for the company's success. First, Spotify boasts a strong competitive moat. By creating personalized playlists and honing its suggestions based on its users' likes and dislikes, Spotify gives its customers what they want when they want it. In addition, with over 675 million monthly average users, Spotify now benefits from a significant network effect, where people can easily connect with others to share new tracks and playlists. Consequently, Spotify users are less likely to leave the platform once they have built out their musical preferences and connected with friends. Second, Spotify's fundamentals have improved greatly. In particular, Spotify is now a consistently profitable company -- something that couldn't be said a few years ago. Indeed, take a look at Spotify's net income by quarter, and it's clear that the company has turned an important corner. After many quarters of struggling to generate any profit at all, the company has now produced several quarters of net income in the $200 million to $300 million range. Over the last 12 months, Spotify's net income stands at $1.3 billion. Spotify's management is the last key piece to the puzzle. CEO DanielEk deserves credit for Spotify's performance. In 2022, Ek prioritized profitability by slashing costs while still focusing on growth. He's both the founder and CEO of the company; his capable leadership and solid track record are more reasons investors should have confidence in Spotify. 2. Meta Platforms Then there's Meta Platforms (NASDAQ: META). Here, too, there are three aspects of Meta's stock and its business that I find particularly appealing. First off, Meta is a leader in digital advertising. The company generates a staggering $170 billion in annual revenue, and around 97% of that revenue comes from ad revenue generated by its social media platforms like Facebook and Instagram. What's more, the digital advertising sector continues to grow at a strong pace. Statista estimates that by 2030, fully 80% of all advertising will be digital, amounting to around $1.2 trillion worldwide. That would represent an increase in digital ad spending of roughly 50% over the next five years. Second, Meta is a leading artificial intelligence (AI) company, too. It has invested billions in AI infrastructure, which is already generating returns for the company by improving ad strategies and return on investment (ROI) for advertisers on its platforms, which, in turn, drive higher ad rates. As Meta continues to invest in AI, higher platform engagement and additional (perhaps paid) features could help drive higher revenue and profitability for the company. Lastly, because of its prominent place within the digital advertising food chain and its AI initiatives, Meta's fundamentals are some of the best within the tech sector. Over the last 12 months, Meta generated: On top of those impressive metrics, in its most recently reported quarter, Meta bought back more than $13 billion of its own stock, reducing its overall share count and boosting the price of outstanding shares. To sum up, Meta's business model is firing on all cylinders and its stock boasts excellent fundamentals. Investors looking for a strong tech stock with fantastic prospects should strongly consider Meta. Should you invest $1,000 in Meta Platforms right now? Before you buy stock in Meta Platforms, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meta Platforms wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor 's total average return is987% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Spotify Technology. The Motley Fool has positions in and recommends Meta Platforms and Spotify Technology. The Motley Fool has a disclosure policy.
