As of June 18, 2025, Spotify Technology SA's estimated intrinsic value ranges from $38.00 to $1043.25 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1043.25 | +44.6% |
| Discounted Cash Flow (5Y) | $696.96 | -3.4% |
| Dividend Discount Model (Multi-Stage) | $546.02 | -24.3% |
| Dividend Discount Model (Stable) | $421.59 | -41.5% |
| Earnings Power Value | $38.00 | -94.7% |
Is Spotify Technology SA (SPOT) undervalued or overvalued?
With the current market price at $721.28, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Spotify Technology SA's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.42 | 0.68 |
| Cost of equity | 5.8% | 8.7% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 15.8% | 17.0% |
| Debt/Equity ratio | 0.02 | 0.02 |
| After-tax WACC | 5.7% | 8.6% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $603 | $120,582M | 88.2% |
| 10-Year Growth | $903 | $181,944M | 79.2% |
| 5-Year EBITDA | $403 | $79,611M | 82.1% |
| 10-Year EBITDA | $628 | $125,589M | 69.8% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $263M |
| Discount Rate (WACC) | 8.6% - 5.7% |
| Enterprise Value | $3,050M - $4,582M |
| Net Debt | $(2,917)M |
| Equity Value | $5,967M - $7,499M |
| Outstanding Shares | 205M |
| Fair Value | $29 - $37 |
| Selected Fair Value | $38.00 |
| Metric | Value |
|---|---|
| Market Capitalization | $147653M |
| Enterprise Value | $144283M |
| Trailing P/E | 109.61 |
| Forward P/E | 70.96 |
| Trailing EV/EBITDA | 16.40 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.02 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $312.98 |
| Discounted Cash Flow (5Y) | 25% | $174.24 |
| Dividend Discount Model (Multi-Stage) | 20% | $109.20 |
| Dividend Discount Model (Stable) | 15% | $63.24 |
| Earnings Power Value | 10% | $3.80 |
| Weighted Average | 100% | $663.46 |
Based on our comprehensive valuation analysis, Spotify Technology SA's weighted average intrinsic value is $663.46, which is approximately 8.0% below the current market price of $721.28.
Key investment considerations:
Given these factors, we believe Spotify Technology SA is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.