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Spotify Technology SA SPOT

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Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Spotify’s Q3 Results Displayed Strength in Both Users and Monetization; Increasing FVE to $216

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

We are increasing our Spotify fair value estimate to $216 from $207. While we long have been expecting strong ad revenue growth and its contribution to margin expansion toward double digits in the long run, we were still impressed with Spotify’s third-quarter ad revenue growth, which we think is indicative of even stronger ad revenue growth in the future. On the music side, we were impressed with listener monetization growth during the quarter, the first growth in five years. While we don’t think Spotify has an economic moat source, growth in listeners and monetization bodes well for the firm’s top and bottom lines.

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Company Profile

Business Description

Spotify, headquartered in Stockholm, Sweden, is one of the world’s largest music streaming service providers, with over 150 million total listeners. The firm monetizes its users through both a paid subscription model, referred to as its premium service, and an ad-based model, referred to as its ad-supported service. Revenue from premium and ad-supported services represented 90% and 10% of Spotify’s 2017 total revenue, respectively.

Contact
42-44, Avenue de la Gare
Luxembourg, L-1610, Luxembourg
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 7,085

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