Is Most-Watched Stock Spotify Technology (SPOT) Worth Betting on Now?

Core Viewpoint - Spotify's stock has shown a strong performance recently, with a +15.5% return over the past month, outperforming the S&P 500 and the Zacks Internet - Software industry [1] Earnings Estimate Revisions - The consensus earnings estimate for Spotify is $2.27 per share for the current quarter, reflecting a year-over-year increase of +58.7%, although it has decreased by -2.4% over the last 30 days [4] - For the current fiscal year, the consensus estimate is $9.88, indicating a +66.1% year-over-year change, with a slight decrease of -2.1% in the last month [4] - The next fiscal year's consensus estimate is $13.69, showing a +38.5% change from the previous year, with an increase of +5.3% over the past month [5] - The Zacks Rank for Spotify is 3 (Hold), indicating a neutral outlook based on recent earnings estimate revisions [6] Revenue Growth Forecast - The consensus sales estimate for the current quarter is $4.78 billion, representing a +16.7% year-over-year change [9] - For the current fiscal year, the revenue estimate is $19.9 billion, indicating a +17.4% change, while the next fiscal year's estimate is $22.75 billion, reflecting a +14.3% change [9] Last Reported Results and Surprise History - In the last reported quarter, Spotify generated revenues of $4.41 billion, a +11.7% year-over-year increase, but fell short of the Zacks Consensus Estimate of $4.6 billion by -4.08% [10] - The EPS for the same period was $1.13, compared to $1.05 a year ago, but the EPS surprise was -50.66% [10] - Over the last four quarters, Spotify surpassed EPS estimates only once and topped revenue estimates twice [11] Valuation - Spotify is graded F on the Zacks Value Style Score, indicating it is trading at a premium compared to its peers [15] - Valuation multiples such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) suggest that the stock may be overvalued relative to its historical values and peers [13][14] Conclusion - The analysis indicates that while Spotify has shown strong recent performance, its Zacks Rank 3 suggests it may perform in line with the broader market in the near term [16]