Discounted Cash Flow Calculation for NYSE:SPOT using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
NYSE:SPOT DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Spotify Technology's share price is below the future cash flow value, and at a moderate discount (> 20%).
Spotify Technology's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Spotify Technology's earnings available for a low price, and how does
this compare to other companies in the same industry?
Spotify Technology's earnings are expected to grow significantly at over 20% yearly.
Spotify Technology's revenue is expected to grow by 19% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Spotify Technology's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Spotify Technology's finances.
The net worth of a company is the difference between its assets and liabilities.
Spotify Technology's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
Spotify Technology's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
Spotify Technology's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Low level of unsold assets.
Debt is covered by short term assets, assets are 3.5x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
Mr. Daniel Ek founded Spotify Limited in 2006 and serves as its Chief Executive Officer. Mr. Ek is Co-founder, Chief Executive Officer and Chairman of Spotify Technology S.A. Mr. Ek is responsible for guiding the vision and strategy of Spotify Technology S.A. and leading the management team. He has been a Director of Spotify Technology S.A. since July 21, 2008. Mr. Ek is a serial entrepreneur and technologist who started his first company in 1997 at the age of 14, co-founded Spotify in 2006 together with Martin Lorentzon. His role is to guide the vision and strategy of Spotify as it grows. Leading the management team, he is also responsible for nurturing a passionate working environment for everyone at Spotify Limited. Prior to Spotify Limited, he founded Advertigo, the online advertising company acquired by TradeDoubler, having previously held senior roles at Nordic auction company Tradera (acquired by Ebay). He also served as Chief Technology Officer at Stardoll, the fashion & entertainment community for tweens.
Daniel's compensation has been consistent with company performance over the past year, both up more than 20%.
Daniel's remuneration is lower than average for companies of similar size in United States of America.
Martin Lorentzon Sven
Co-Founder & Director
Chief Financial Officer
Chief Premium Business Officer
Chief Research & Development Officer
Chief Content Officer
VP, Head of Finance/FP&A and Investor Relations
Chief Human Resources Officer
Global Head of Markets
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Spotify Technology board of directors is less than 3 years, this suggests a new board.
Why Spotify Technology SA's (NYSE:SPOT) Ownership Structure Is Important
In this article, I'm going to take a look at Spotify Technology SA’s (NYSE:SPOT) latest ownership structure, a non-fundamental factor which is important, but remains a less discussed subject among investors. … The implications of these institutions’ actions can either benefit or hinder individual investors, so it is important to understand the ownership composition of your stock investment. … Therefore, it is beneficial for us to examine SPOT's ownership structure in more detail.
Spotify Technology SA (NYSE:SPOT): Is Breakeven Near?
Spotify Technology SA's (NYSE:SPOT):. … Spotify Technology S.A., together with its subsidiaries, provides music streaming services worldwide. … With the latest financial year loss of -US$1.23b and a trailing-twelve month of -US$1.23b, the US$30.27b market-cap alleviates its loss by moving closer towards its target of breakeven.
Tech Industry Trends And Its Impact On Spotify Technology SA. (NYSE:SPOT)
Tech analysts are forecasting for the entire software tech industry, a positive double-digit growth of 14.52% in the upcoming year , and a massive growth of 78.66% over the next couple of years. … Spotify Technology lags the pack with its negative growth rate of -66.23% over the past year, which indicates the company will be growing at a slower pace than its software peers. … If Spotify Technology has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the tech industry.
Loss-Making Spotify Technology SA. (NYSE:SPOT) Expected To Breakeven
Many investors are wondering the rate at which SPOT will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for SPOT’s growth and when analysts expect the company to become profitable. … NYSE:SPOT Past Future Earnings May 25th 18 Underlying developments driving SPOT’s growth isn’t the focus of this broad overview, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period. … For a more comprehensive look at SPOT, take a look at SPOT’s company page on Simply Wall St.
Spotify Technology SA.'s (NYSE:SPOT) Earnings Dropped -73.23%, Did Its Industry Show Weakness Too?
Assessing Spotify Technology SA.'s (NYSE:SPOT) past track record of performance is a useful exercise for investors. … For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. … NYSE:SPOT Income Statement May 12th 18 We can further analyze Spotify Technology's loss by looking at what the industry has been experiencing over the past few years.
What Investors Should Know About Spotify Technology SA.'s (NYSE:SPOT) Financial Strength
View our latest analysis for Spotify Technology Does SPOT produce enough cash relative to debt? … With this debt repayment, SPOT currently has €1.51B remaining in cash and short-term investments for investing into the business. … On top of this, SPOT has generated cash from operations of €179.00M over the same time period, leading to an operating cash to total debt ratio of 18.94%, indicating that SPOT’s operating cash is not sufficient to cover its debt.
Spotify Technology S.A., together with its subsidiaries, provides music streaming services worldwide. It operates through two segments, Premium and Ad-Supported. The Premium segment offers commercial-free music services to subscribers comprising unlimited online and offline high-quality streaming access to its catalog. The Ad-Supported segment provides ad-supported users with limited on-demand online access to its catalog. As of December 31, 2018, the company’s platform included 207 million monthly active users and 96 million premium subscribers in approximately 78 countries and territories. Spotify Technology S.A. was founded in 2006 and is based in Luxembourg City, Luxembourg.
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