Is It Too Late to Buy Spotify Stock After Its Whopping 180% Gain Over the Past Year?

Core Viewpoint - The S&P 500 is experiencing a bull market with a 23% return over the past year, while Spotify's stock has surged by 180%, driven by strong subscriber growth and effective cost management [1] Group 1: Subscriber Growth and Revenue - Spotify ended 2024 with a record 675 million monthly active users, including 425 million free users and 263 million premium subscribers, the latter contributing 87% of total revenue [2] - The premium subscriber count exceeded management's forecast by 3 million, indicating strong demand [2] - Spotify generated $16.3 billion in total revenue during 2024, marking an 18% year-over-year increase, up from 13% growth in 2023 [6] Group 2: Cost Management and Profitability - Spotify reduced its operating expenses by approximately 12% in 2024, which included cuts in research and development and marketing [7] - The combination of accelerating revenue growth and cost reductions led to a net income of$ 1.2 billion in 2024, a significant turnaround from a net loss of $554 million in 2023 [8] Group 3: Stock Valuation - Spotify's stock is currently trading at a P/E ratio of 109 based on earnings per share of$ 5.74 for 2024, significantly higher than the S&P 500's P/E ratio of 25.5 [9] - The P/S ratio for Spotify reached an all-time high of 7.8, double its long-term average of 3.9 [10] Group 4: Future Outlook - CEO Daniel Ek has projected that Spotify's annual revenue could reach $100 billion by 2032 and that the monthly active user base could exceed 1 billion by 2030 [11]