Should you buy Spotify stock? (February 2024)

Published first at https://www.3minutebreakdowns.com Spotify stock analysis. Ticker: $SPOT Spotify reported earnings this week and the stock jumped by 8% taking the market cap to 48 billion dollars. With 6 billion of cash and investments and 1.3 billion of long term debt, the enterprise value is 43 billion. Revenue over the last 12 months is 14.3 billion representing 13% growth year over year. Free cash flow improved to 726 million but when you include stock based compensation, the company is still not profitable. Net income over the last 12 months was negative 570 million. Spotify’s latest earnings report showed some strong growth. Number of paying subscribers increased 15% to 236 million and the number of ad supported users increased 28% to 379 million. Quarterly revenue increased 16%. But it wasn’t all good news. Spotify has struggled with low gross margins for years because the company has to pay out significant royalties to music labels. Cost of revenue, which includes these royalties, increased by 14%, which helps to explain why the company posted another unprofitable quarter. And high costs to music labels are unlikely to disappear. Last week, TikTok had to mute millions of videos on its platform after it failed to agree terms with Universal Music. Spotify’s response is to promote independent artists and invest heavily into other audio products such as podcasts and audiobooks. A deal with Joe Rogan is reportedly worth up to $250 million dollars. #investing #stockstobuy #spotify #3mb