Pre-Q4 Earnings: Should Spotify Stock be in Your Portfolio?

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$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]