Should You Buy Spotify Stock Ahead of Q1 Earnings Report?

Core Viewpoint - Spotify Technology S.A. is expected to report strong earnings growth in Q1 2025, with earnings per share estimated at $2.32, reflecting a 121$4.5 billion, indicating a 13.3% growth compared to the previous year [1]. Earnings Estimates - The Zacks Consensus Estimate for Q1 earnings has seen two upward revisions and one downward revision in the past 30 days, with a 1.3% increase in the 2024 earnings estimate during the same period [2]. - The current earnings estimates for Q1, Q2, E1, and F2 are $2.32,$2.44, $10.55, and$13.56 respectively, showing a positive trend in revisions over the last 60 days [3]. Earnings Surprise History - Spotify has a notable earnings surprise history, surpassing the Zacks Consensus Estimate in two of the last four quarters, with an average positive surprise of 22% [4]. Earnings Prediction Model - The current Earnings ESP for Spotify is -8.61%, and it holds a Zacks Rank of 3 (Hold), indicating that the model does not predict a definitive earnings beat this time [5][6]. Subscriber Growth - The growth in subscribers and monthly active users (MAU) is expected to positively impact both revenue and earnings, with total MAUs estimated at 678.3 million (10.3% year-over-year growth), ad-supported MAUs at 426.4 million (10% growth), and premium subscribers at 265.41 million (11% growth) [8]. Stock Performance - Spotify's stock has experienced significant price increases, rallying 35% year-to-date, 58% over the past six months, and 109% in the past year, indicating a strong upward trend [9]. Investment Considerations - The company's strong performance metrics are attributed to price hikes, a loyal consumer base, and cost reductions, which have contributed to growth in both top and bottom lines [10]. - The expectation is for another robust quarterly performance driven by subscriber gains and increases in average revenue per user (ARPU), which will enhance the company's financial position [11]. Long-term Outlook - While current growth prospects for Spotify appear strong, there may be a potential correction in the stock price, suggesting that investors might consider waiting for a more opportune moment to invest [12]. - The long-term growth potential of the company remains strong, making it a stock to monitor for future investment opportunities [14].