Spotify Stock's Rally Still Has Legs To Run Higher

Core Viewpoint - Value investors may miss out on significant opportunities by avoiding stocks that have reached new highs, as these stocks can continue to perform well in the long term [1] Company Performance - Spotify reported 678 million monthly active users, reflecting a net growth rate of 10% over the past year [5] - The company achieved total revenue of $4.1 billion, marking a 15% increase from the previous year [6] - Spotify's subscription-based revenue model contributes to its stability and predictability, which is attractive to investors during market volatility [7] Financial Metrics - Spotify generated $534 million in free cash flow, representing over 158% growth for the year [8] - The company has a return on invested capital (ROIC) of 17.7%, a key metric for value investors [9] Future Outlook - Wall Street analysts forecast earnings per share (EPS) of $10.00 for fiscal year 2025, indicating a 75.4% increase from the previous year [10] - Institutional investors have increased their holdings in Spotify by 2.3%, reflecting confidence in the company's future growth [11] Market Sentiment - Spotify's stock trades at a price-to-earnings (P/E) ratio of 110.2, significantly higher than the sector average of 27.3, indicating a premium that investors are willing to pay for expected outperformance [13] - Analysts maintain a Moderate Buy rating for Spotify, with some projecting a price target of $725, suggesting potential upside for investors [12]