Spotify Technology SA SPOT will be reporting its fourth-quarter earnings on Tuesday. Wall Street expects $2.06 in EPS and $4.15 billion in revenues as the company reports before market hours.The stock is up 145.71% over the past year, 19.83% YTD.Let’s look at what the charts indicate for Spotify stock and how the stock currently maps against Wall Street estimates.Read Also: Universal Music And Spotify Partner To Boost Artist Earnings And Innovate Streaming ExperienceSPOT Stock Strongly Bullish Ahead Of Q4 E ...

The upcoming report from Spotify (SPOT) is expected to reveal quarterly earnings of $1.92 per share, indicating an increase of 592.3% compared to the year-ago period. Analysts forecast revenues of $4.36 billion, representing an increase of 10.3% year over year.Over the last 30 days, there has been a downward revision of 1.6% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course ...

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Core Viewpoint - Spotify Technology S.A. is expected to report its fourth-quarter 2024 results on February 4, with earnings estimated at $1.92 per share, reflecting a year-over-year growth of 592.3%, and revenues projected at $4.35 billion, indicating a 10% year-over-year increase [1] Earnings Estimates - The Zacks Consensus Estimate for fourth-quarter 2024 earnings has decreased by 3% over the past 30 days, with two downward revisions and one upward revision [2] - Spotify's earnings surprise history shows that it lagged the Zacks Consensus Estimate in two of the last four quarters, with an average negative surprise of 74.4% [2] Earnings Prediction Model - The current model does not predict an earnings beat for Spotify, as it has an Earnings ESP of -16.45% and a Zacks Rank of 3 (Hold) [3] Growth Factors - The growth in subscribers and monthly active users (MAU) is expected to positively impact both the top and bottom lines in the upcoming quarter [4] - The consensus estimate for total MAUs is 665.3 million, reflecting a year-over-year growth of 10.5%, while ad-supported MAUs are estimated at 420.2 million, indicating an 11% increase [5] Price Dynamics - Spotify's stock has increased significantly, with a 150% rise over the past year, 57% over the past six months, and 20.4% in the last month, suggesting a rally phase [6] Conclusion on Investment - While Spotify's growth prospects appear strong, potential investors may consider waiting for a correction, as the stock does not seem positioned for an earnings beat, although its long-term growth potential remains compelling [7]

Core Viewpoint - Spotify's stock has surged approximately 140% over the last 12 months and over 540% since the beginning of 2023, raising questions about its future performance [1] Group 1: Recent Performance and Turnaround - Spotify's stock experienced a significant decline of over 80% in 2021 and 2022 due to mounting losses and a general downturn in growth stocks [2] - In early 2023, CEO Daniel Ek implemented cost-cutting measures, reducing the workforce by about 17%, which helped refocus the company on music streaming and control costs [3] - After reaching a multiyear low operating margin of -7.8% in mid-2023, Spotify's operating margin has improved to 11.4%, contributing to the stock's rise to all-time highs [4] Group 2: Revenue Growth and Business Model - Spotify has averaged quarterly revenue growth of nearly 18% over the last five years, with recent quarters exceeding this average [7] - Approximately 88% of Spotify's revenue comes from premium subscriptions, with the company also generating revenue from ads and converting ad-supported listeners into subscribers [9] - User growth is a key indicator for future revenue, as an increase in ad-supported monthly active users (MAUs) leads to higher conversion rates to paid subscriptions [10] Group 3: Future Outlook - In the most recent quarter ending September 30, 2024, Spotify reported an 11% increase in ad-supported MAUs and a 12% increase in premium subscribers [11] - Analysts project Spotify's sales to grow by 15% in 2025, with earnings expected to rise by nearly 60% [12] - The company is viewed as having significant growth potential, with expectations for its stock to outperform the market over the next year [13]

Core Insights - Spotify is exploring new growth opportunities by potentially introducing price tiers aimed at superfans, which could enhance revenue and profit margins [1] Revenue Growth Strategy - The company has historically driven revenue growth through subscriber additions and price increases [1] - The introduction of price tiers for superfans is expected to further boost Spotify's revenue and profits [1]

Core Viewpoint - Wall Street anticipates a year-over-year increase in Spotify's earnings driven by higher revenues, with a focus on how actual results will compare to estimates [1][2]. Earnings Expectations - Spotify is expected to report quarterly earnings of $1.91 per share, reflecting a significant year-over-year increase of +589.7% [3]. - Revenue projections stand at $4.35 billion, indicating a 10% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 1.58% over the last 30 days, indicating a reassessment by analysts [4]. - A negative Earnings ESP of -14.49% suggests a bearish outlook from analysts regarding Spotify's earnings prospects [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict earnings deviations, but its predictive power is stronger for positive readings [7][8]. - Spotify's current Zacks Rank is 3, which complicates the prediction of an earnings beat [11]. Historical Performance - In the last reported quarter, Spotify was expected to earn $1.75 per share but only achieved $1.59, resulting in a surprise of -9.14% [12]. - Over the past four quarters, Spotify has beaten consensus EPS estimates twice [13]. Conclusion - Despite the potential for an earnings beat, various factors can influence stock movement, making it essential to consider other elements beyond earnings results [14][16].

Group 1: Company Financials and Payouts - Spotify paid $10 billion to the music industry in the last year and has given nearly $60 billion in total payouts since its inception [1] - More than 10,000 artists earn over $100,000 per year from streaming revenues, compared to over 10,000 artists earning more than $10,000 per year in 2014 [3] Group 2: Market Context and User Base - There are over 500 million paying music streaming customers worldwide, with Spotify having over 252 million subscribers as of Q3 2024 [2] - More than 60% of Spotify's current users are on its ad-supported free tier [2] Group 3: Industry Trends and Competition - Per-stream rates for independent artists are stabilizing, but Spotify has the lowest payout at $3.0 per 1,000 streams, compared to Amazon Music, Apple Music, and YouTube which pay $8.8, $6.2, and $4.8 respectively [4] - An average of 99,000 tracks are uploaded to streaming platforms daily, with global streams reaching 4.8 trillion, marking a 14% year-on-year increase [7] Group 4: Artist Engagement and Streaming Dynamics - Spotify's Discover Mode allows artists to enhance song visibility through algorithms while accepting a pay cut, leading to a situation where artists need significantly more streams to earn the same amount of money [6]

Core Insights - Spotify has entered a new multi-year partnership with Universal Music Group, which is expected to be mutually beneficial for both companies [1][2] - JPMorgan analyst Doug Anmuth maintains an Overweight rating on Spotify with a price target of $555, indicating confidence in the company's growth potential [1] Partnership Details - The partnership covers both recorded music and music publishing, marking Spotify's first publishing agreement with UMG [2] - The deal is seen as a strategic move, as the last renewal between Spotify and UMG occurred in July 2023, suggesting that Spotify is satisfied with the outcomes of their previous collaboration [2] Benefits of the Deal - The partnership is anticipated to provide benefits to artists, songwriters, and consumers through new offers, subscription tiers, and a richer content catalog [3] - Enhanced access to video content is highlighted as a significant aspect of the deal, reflecting the growing importance of video on the Spotify platform [3] Market Position - Spotify is recognized as the largest pure-play audio streaming service, capitalizing on the shift from transaction-based to access-based streaming models [4] - The stock price of Spotify increased by 1% to $513.98, reaching a new 52-week high of $516.58, with a remarkable increase of over 130% in the past year [4]

Core Insights - Spotify is focusing on video to enhance its podcasting business, investing in video creators and launching a revenue-sharing program for video podcasts [1][8] - Approximately 250 million of Spotify's 640 million users have engaged with video podcasts, indicating a strong user interest in this format [2][10] - Spotify is positioning itself as a multi-platform player, allowing creators to distribute content across various platforms to maximize reach and advertising revenue [9][10] Podcasting Platform Comparison - Spotify and YouTube are increasingly similar in their offerings, both providing free and paid tiers, with Spotify Premium priced at $12 per month and YouTube Premium at $14 [4] - Both platforms offer creators access to analytics dashboards and allow for ad-free experiences for premium subscribers, although Spotify has a 50-50 revenue split compared to YouTube's 55% for creators [5][6] Audience Engagement and Discovery - Spotify's podcasting platform is second to YouTube in the U.S., with 21% of weekly podcast consumers preferring Spotify over YouTube's 31% [2] - Content discovery on Spotify is less effective compared to platforms like YouTube and TikTok, which have advanced algorithms for user engagement [11][12] - Spotify is emphasizing listener loyalty, with average monthly app usage increasing from 30 hours in 2020 to 40 hours in late 2024, suggesting strong retention capabilities [13]