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The Zacks Consensus Estimate for earnings in the to-be-reported quarter stands at $1.1 per share, indicating a significant improvement from a loss of $1.69 per share incurred in the year-ago quarter. The consensus mark for revenues is pegged at $4.1 billion, indicating year-over-year growth of 18.7%.
Two estimates for the to-be-reported quarter moved south over the past 30 days versus no northward revisions. Over the same period, the Zacks Consensus Estimate for 2024 earnings has decreased 1.8%.
Image Source: Zacks Investment Research
SPOT’s earnings surprise history has not been impressive. Earnings lagged the Zacks Consensus Estimate in two of the four trailing quarters and surpassed twice, the average negative surprise being 40.2%.
Our proven model doesn’t conclusively predict an earnings beat for Spotify this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
The growth of subscribers and monthly active users (MAU) is likely to have benefited the top line in the to-be-reported quarter, directly benefiting the bottom line as well.
The consensus estimate for total MAUs is pegged at 631.3 million, indicating year-over-year growth of 10%. The consensus estimate for total ad-supported MAUs stands at 396.7 million, indicating year-over-year growth of 10%. The consensus mark for premium subscribers stands at 245.3 billion, indicating year-over-year growth of 8.5%.
Price Dynamics
SPOT has rallied a massive 43% over the past six months while plummeting 3% in the past three months and 6% in the past month. These price dynamics suggest that the stock is in a correction phase.
Image Source: Zacks Investment Research
Investment Considerations
Spotify has demonstrated strong performance metrics, attributed to sustained price hikes, a loyal consumer base and significant cost reductions in 2023. The price hikes have bolstered SPOT's top and bottom-line growth, supported by the platform's highly loyal user base and its ability to increase adoption, as evidenced by the growing MAUs and premium subscribers.
Therefore, we believe that SPOT is likely to report another robust quarterly performance, driven by subscriber gains and increases in ARPU, which will positively impact the bottom line and strengthen the company’s balance sheet.
We have seen multiple price increases among its music streaming competitors, including Alphabet's (GOOGL - Free Report) YouTube Premium, Apple’s (AAPL - Free Report) Music/TV, and Amazon’s (AMZN - Free Report) Music Unlimited.
Conclusion
The stock has corrected significantly over the past month. However, the company did not lose its fundamental strength. SPOT’s current prospects appear robust on the back of continued price hikes, a sticky consumer base and substantial cost cuts.
SPOT’s robust financial health and strong top and bottom-line growth prospects make it a must-buy for investors seeking exposure to the music-streaming sector during the earnings season.
Image: Bigstock
Pre-Q2 Earnings: Is Spotify (SPOT) a Portfolio Must-Have?
Spotify Technology S.A. (SPOT - Free Report) will report its second-quarter 2024 results on Jul 23, before the bell.
The Zacks Consensus Estimate for earnings in the to-be-reported quarter stands at $1.1 per share, indicating a significant improvement from a loss of $1.69 per share incurred in the year-ago quarter. The consensus mark for revenues is pegged at $4.1 billion, indicating year-over-year growth of 18.7%.
Two estimates for the to-be-reported quarter moved south over the past 30 days versus no northward revisions. Over the same period, the Zacks Consensus Estimate for 2024 earnings has decreased 1.8%.
SPOT’s earnings surprise history has not been impressive. Earnings lagged the Zacks Consensus Estimate in two of the four trailing quarters and surpassed twice, the average negative surprise being 40.2%.
Spotify Technology Price and EPS Surprise
Spotify Technology price-eps-surprise | Spotify Technology Quote
Earnings Whispers
Our proven model doesn’t conclusively predict an earnings beat for Spotify this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Spotify has an Earnings ESP of -9.70% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping Upcoming Results
The growth of subscribers and monthly active users (MAU) is likely to have benefited the top line in the to-be-reported quarter, directly benefiting the bottom line as well.
The consensus estimate for total MAUs is pegged at 631.3 million, indicating year-over-year growth of 10%. The consensus estimate for total ad-supported MAUs stands at 396.7 million, indicating year-over-year growth of 10%. The consensus mark for premium subscribers stands at 245.3 billion, indicating year-over-year growth of 8.5%.
Price Dynamics
SPOT has rallied a massive 43% over the past six months while plummeting 3% in the past three months and 6% in the past month. These price dynamics suggest that the stock is in a correction phase.
Investment Considerations
Spotify has demonstrated strong performance metrics, attributed to sustained price hikes, a loyal consumer base and significant cost reductions in 2023. The price hikes have bolstered SPOT's top and bottom-line growth, supported by the platform's highly loyal user base and its ability to increase adoption, as evidenced by the growing MAUs and premium subscribers.
Therefore, we believe that SPOT is likely to report another robust quarterly performance, driven by subscriber gains and increases in ARPU, which will positively impact the bottom line and strengthen the company’s balance sheet.
We have seen multiple price increases among its music streaming competitors, including Alphabet's (GOOGL - Free Report) YouTube Premium, Apple’s (AAPL - Free Report) Music/TV, and Amazon’s (AMZN - Free Report) Music Unlimited.
Conclusion
The stock has corrected significantly over the past month. However, the company did not lose its fundamental strength. SPOT’s current prospects appear robust on the back of continued price hikes, a sticky consumer base and substantial cost cuts.
SPOT’s robust financial health and strong top and bottom-line growth prospects make it a must-buy for investors seeking exposure to the music-streaming sector during the earnings season.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.