This leaves investors with the feeling that the stock may have fallen too far. In other words, analysts are now very positive about the stock, even much more than I am. That also represents a huge upside of 78% from March 8’s price level. In fact, 25 analysts covered by Refinitiv, as seen on Yahoo! Finance’s site, have an average target of $235.05. This implies a potential 75% upside in SPOT stock. For example, Seeking Alpha’s survey of 27 analysts shows that their average price target is $231.03. This is a reasonably good return for SPOT stock owners, especially now that the stock has fallen so far and the company’s outlook is still strong.Īnalysts are also positive about the stock as well. That implies that SPOT stock should be priced at 1.217 x $132.18, or $160.86 per share, i.e., 22% higher than the price of SPOT stock as of March 8. This is 22% over today’s market capitalization of $26 billion. For example, a typical 3% FCF yield (for tech stocks) would bring the forecast stock market value to $31.65 billion (i.e., $950m/0.03=$31,650m). We can use that to help derive a price for Spotify.
That would raise the annual FCF to close to $1 billion, (i.e., 0.075 x $12.66b = $950 million). Where This Leaves Spotifyįor example, let’s assume that the company can double its FCF margin over the next year or so to 7.5%. With this higher sales level, there is a good chance that cash will rise substantially during the year. This year analysts forecast that revenue will rise to $12.66 billion, up 18% over the $10.73 billion in sales during 2021. That means that the FCF margin actually fell during Q4, even though the actual FCF rose slightly. However, last quarter the company made 99 million EUR in FCF on 2.5 billion EUR in revenue or 3.95%.
That is not a very high FCF margin, but analysts hope that it will grow exponentially as revenue rises. That puts it at 3.83% of its 2.689 billion EUR ($2.985 billion) in revenue. It said that Q4 FCF was 103 million EUR, or $114.33 million. Spotify is one of the growing numbers of firms that directly report their FCF in their results.
Spotify’s quarterly revenue was up 24% YoY, driven primarily by a 22% growth in premium subscription revenue.īut more importantly, its free cash flow (FCF) is solidly profitable. There are now more ad-supported users than premium subscription users, but most of the revenue comes from the latter. In addition, its premium subscriber base grew 16% vs. Its total monthly active users (MAUs) were up 18% during the quarter on a year-over-year (YoY) basis. 2, Spotify reported impressive results for Q.
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