Is Spotify Stock a Buy Now?
Spotify added a record 38 million monthly active users in the fourth quarter, beating management's expectations, but its stock has pulled back significantly from its 52-week high. The company's profit margins continue to expand, but its valuation remains a concern, with a forward price-to-earnings ratio of about 33.
Spotify's fourth-quarter revenue rose 13% year over year to €4.5 billion, driven by robust user growth. The company added a record 38 million monthly active users, bringing its total audience to 751 million. Spotify's gross margin expanded to 33.1%, driven by stronger profitability across its premium subscriber base and ad-supported free tier. Despite strong fundamentals, the stock has struggled to regain its previous highs due to valuation concerns. The company faces competition from deep-pocketed tech giants, including Apple, Alphabet, and Amazon. Spotify's management has built its product to work anywhere, helping defend its leadership position.
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