These industry leaders should be very rewarding investments. The S&P 500 index has delivered annualized returns of about 10% since 1957. That closely approximates the growth in the average company's earnings. If you want to beat the market, you want to look for companies that can grow their earnings well above the average. Here are two companies that can deliver superior earnings growth and outperform the S&P 500 over the next five years. 1. Tesla Tesla (TSLA 0.58%) shares delivered an 8,500% return to shar ...

Spotify (SPOT) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving. The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this music-streaming service operator, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings ...

Spotify Technology S.A. (SPOT) reported its second-quarter 2024 results last week, but the stock hasn't moved much since then. However, it's worth noting that the stock has already gained an impressive 75.1% year to date, significantly outperforming the industry's 16.4% rally. The quarterly results were mixed, with earnings beating while revenues missing estimates. Nonetheless, both top and bottom-line growth rates were robust. Total revenues saw a 20% year-over-year increase, driven by a 21% rise in premiu ...

Investment Rating - The investment rating for the company is "Buy" with a target price of $378.52, maintained from the previous target [23][25]. Core Insights - The report highlights that Spotify has maintained strong Monthly Active User (MAU) growth despite two price increases in 2024, indicating robust user loyalty. The company aims to enhance profitability through steady growth in premium membership revenue and increased advertising revenue in emerging markets. However, competition from Apple in the streaming music sector poses a potential long-term threat to Spotify's membership revenue growth [25]. - Spotify's gross margin is projected to rise from 24% in Q2 2023 to 29% in Q2 2024, with a net profit turnaround from a loss of €302 million to a profit of €274 million, achieving a net margin of 7%. Premium membership revenue reached €3.351 billion, a 21% increase year-over-year, while advertising revenue contributed €456 million, representing 12% of total revenue but showing significant growth in gross profit contribution [25]. - The report emphasizes the strong pricing power of Spotify, driven by the premium membership segment, while also noting potential cost pressures from content licensing fees and rising R&D expenses due to advancements in artificial intelligence [25]. Financial Summary - Total revenue is expected to grow from €11.727 billion in 2022 to €20.451 billion by 2026, with net profit projected to shift from a loss of €430 million in 2022 to a profit of €1.873 billion in 2026 [54][61]. - The operating profit margin is forecasted to improve from 144.5% in 2022 to 151.1% in 2026, while the return on equity (ROE) is expected to rise from -19.0% in 2022 to 37.8% in 2026 [5][61].

Spotify Founder and CEO Daniel Ek believes the company's approach to flexibility for its customers is a key success factor. "We're at 246 million paid subscribers, so we're one of the largest subscription services on the planet," Ek said during the earnings call. "Interestingly enough, a huge part of that success was really driven by a very simple proposition, a one-size-fits-all proposition. But part of why I believe the subscription business in the last year or two has been doing better is because we move ...

The company continues to post growth rates well in the double digits. Spotify's (SPOT -1.12%) recent second-quarter earnings release was music to the ears of many investors. The streaming service convincingly beat the average bottom-line estimate while delivering robust growth where it counted. In the wake of that release, several analysts raised their price targets on the high-profile music streamer. One even went so far as to upgrade his recommendation on its stock. A recommendation change and big price t ...

Shares of Spotify Technology SA SPOT climbed in early trading on Wednesday, after the company reported its second-quarter results. The results came amid an exciting earnings season. Here are some key analyst takeaways. Bank of America analyst Jessica Reif Ehrlich reiterated a Buy rating, while raising the price target from $380 to $430. Goldman Sachs analyst Eric Sheridan upgraded the rating from Neutral to Buy, while lifting the price target from $320 to $425. JPMorgan analyst Doug Anmuth reiterated an Ove ...

As indicated in my initiation report, Spotify has grown its ad-supported streaming service. Ad-supported service could both increase the number of Spotify's subscribers, and help the company generate some ads revenue. With the Ad-supported service, Spotify can attract more subscribers who are sensitive to the monthly subscription fees. The chart below shows the average monthly revenue per premium subscriber. Spotify has been improving its monetization since Q2 FY23. As pointed out in my previous article, in ...

Spotify Technology (SPOT) posted second-quarter results before the bell Tuesday that delivered record profit and offered fresh guidance. Spotify shares jumped nearly 12% in recent trading Tuesday. Do you have a news tip for Investopedia reporters? Please email us at Spotify posted record quarterly operating income and earnings per share that surpassed analysts' expectations. The streaming-audio company said it expects third-quarter revenue in line with current analyst expectations. Spotify Premium prices ar ...

Financial Data and Key Metrics Changes - The company added 7 million net new subscribers in the quarter, exceeding forecasts by 1 million [8] - Total revenue grew 21% year-on-year on a constant currency basis to €3.8 billion [8] - Operating income reached a record €266 million, supported by gross profit strength and lower operating expenses [20] - Free cash flow was a record €490 million in the quarter, driven by an improving operating income profile [20] - Gross margin came in at a Q2 record of 29.2%, surpassing guidance by 110 basis points [103] Business Line Data and Key Metrics Changes - Premium ARPU growth accelerated by 300 basis points to 10% year-on-year on a currency-neutral basis [8] - The advertising business saw currency-neutral growth of 12% year-on-year, although performance was slower relative to Q1 [8] - The company is experiencing a slight moderation in ARPU growth for Q3, expected to be in the 100 to 200 basis point range [9] Market Data and Key Metrics Changes - The company is focusing on developing markets for user acquisition, which presents challenges in engagement and conversion to paid subscriptions [6] - In developed markets, the company sees strong penetration and broad awareness, allowing for strong revenue growth even as these markets mature [45] Company Strategy and Development Direction - The company aims to transform its business with a focus on monetization and has multiple growth options available [7] - There is a strategic emphasis on improving marketing effectiveness and enhancing the free product pipeline to boost engagement and retention [101] - The company is exploring new subscription plans and diversifying its offerings to attract different consumer segments [111] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming the current MAU growth challenges, viewing it as a matter of "when" rather than "if" [50] - The company is optimistic about future growth opportunities, particularly in developing markets and through enhanced product offerings [64] - Management highlighted the importance of creating win-win scenarios for both creators and consumers to drive long-term value [80] Other Important Information - The company is monitoring the impact of recent price increases on subscriber retention, with early signs indicating better-than-expected cancellation rates [87] - The company is committed to maintaining healthy relationships with the music industry, focusing on mutual growth rather than a zero-sum game [32] Q&A Session All Questions and Answers Question: What actions are being taken to drive more MAU growth? - The company is optimizing marketing in developing markets and enhancing product offerings to improve engagement and retention [117] Question: How has podcast engagement changed on Spotify? - Engagement on podcasts remains healthy, with video podcasts showing even higher engagement levels compared to audio-only content [120] Question: Can you provide an update on your relationship with the labels? - The company maintains a win-win perspective with the music industry, focusing on increasing payouts and fostering healthy growth [59]