Spotify Technology SA (NYSE:SPOT) has found a path to monetization

Spotify Technology SA (NYSE:SPOT) We’d like to say a few words about the company, as it could be approaching something big in its business. Spotify Technology SA, together with its subsidiaries, provides audio streaming subscription services worldwide. The $62 billion market cap company posted a loss of €532 million in its most recent financial year, and a trailing-12-month loss of €110 million, narrowing the gap between loss and breakeven. As the path to profitability is of interest to Spotify Technology investors, we decided to gauge market sentiment. Below, we provide a rough summary of industry analysts’ expectations for the company.

Check out the latest analysis for Spotify Technology

According to 31 industry analysts covering Spotify Technology, the consensus is that breakeven is near. Analysts expect the company to post a final loss in 2023, followed by a profit of €937 million in 2024. The company is therefore expected to breakeven approximately 12 months from now. How fast would the company need to grow to achieve the consensus forecast of breaking even within 12 months? Using a line of best fit, we calculated an average annual growth rate of 41%, which is rather optimistic. If this growth rate is too aggressive, the company could become profitable much slower than analysts expect.

The underlying trends driving Spotify Technology’s growth are not the focus of this extensive overview, but consider that generally high forecast growth rates are not unusual for companies currently in an investment period.

We note that the company manages its capital carefully, with debt making up 38% of its equity. This means that it primarily funds its operations from equity and its low debt load reduces the risks associated with investing in loss-making companies.

Next steps:

There are too many aspects of Spotify Technology to cover in one short article, but you can find all the key fundamentals about the company in one place: Spotify Technology’s company page on Simply Wall St. We’ve also compiled a list of key aspects to look out for.

1. evaluation: What is Spotify Technology worth today? Is its future growth potential already priced into the price? The intrinsic value infographic in our free research report helps you visualize whether Spotify Technology is currently undervalued by the market.
2. Management TeamHaving an experienced management team at the helm instills confidence in our business. Take a look at the backgrounds of Spotify Technology’s board members and CEO.
3. Other high-performing stocks: Are there other stocks with proven track records and better prospects? See our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

Have feedback about this article? Concerns about the content? Contact us directly. Or email us at editorial-team@simplywallst.com