Spotify Ended 2022 With Impressive User Growth and a Slight Miss on Revenue; Shares Undervalued

Spotify reported mixed fourth-quarter 2022 results with revenue coming in slightly below and operating loss a bit better than the FactSet consensus estimates. In addition, the firm’s monthly active users and premium subscribers increased more than expected, which bodes well for Spotify’s revenue in 2023 and beyond. We are pleased with the firm’s increasing focus on accommodating the healthy top-line growth with operating more efficiently to progress further toward breaking even and/or generating operating income, which we expect will take place in 2024 and beyond. While the stock is up more than 12% as the market has cheered Spotify’s impressive fourth-quarter user growth, our $170 fair value estimate represents further upside.