$SPOT (+0.42%)

Spotify has come under pressure and is back on the radar. Now things could get exciting again for anti-cyclical investors.

When anti-cyclical investing becomes a success story

It never ceases to amaze me how much time has passed since the last analysis of individual Aktien has passed since the last analysis. But during this time, the share was simply uninteresting for anti-cyclical investors.

However, there were times when it was completely different. From 2022 to 2024, I had written more than half a dozen Analysen written about Spotify. The share price then soared.

In fact, the share price has increased more than tenfold. It is a prime example of the success that is possible with anti-cyclical investments.

Of course, not every share works like this, but how many such bull's-eyes does an investor need? The most recent example is probably Micron.

However, Spotify has recently undergone another major correction, which could make things interesting again.

A whole range of growth drivers

The consumption of music is generally shifting away from physical data carriers to the internet.

The number of customers is therefore likely to continue to rise. The target is one billion monthly active users by 2030, compared to 713 million today.

At the same time, the subscription price will increase over time. There is also considerable growth in the advertising business.

A few quarters ago, this area hardly played a role, today it is a mainstay, but more on that later.

Spotify is now much more than just a music platform, even if the company is primarily perceived as such.

Podcasts and audio books are playing an increasingly important role. We have been aware of the sums earned in this area not only since Joe Rogan.

And of course Joe Rogan is just the tip of the iceberg. There are now countless, extremely successful podcasts on Spotify.

Worldwide, Spotify is probably in the top 3 of the largest podcast platforms in terms of listeners - in the USA it is number 1, ahead of Apple and Google.

We will see what market share can be secured in the audiobook sector in the future.

The figures speak for themselves

The bottom line is that Spotify has significantly increased its revenue from 7.88 to 15.67 billion euros over the past five years.

The free cash flow has been positive for many years, but this was simply ignored on the stock market as the reported profit up to and including 2023 was negative.

However, the tide has turned on this front too. In the 2024 financial year, earnings rose to USD 5.71 per share. This is likely to be followed by a 47% jump in earnings to USD 8.40 per share in the current financial year.

Spotify therefore has a P/E ratio of 60.4, which is not exactly low at first glance, but this estimate is put into perspective for two reasons.

In the 2026 financial year, earnings are expected to rise by 64% to USD 13.84 per share, which would reduce the P/E to 36.7.

In addition, free cash flow is still well above reported earnings. According to consensus estimates, free cash flow is expected to rise to USD 19 per share in financial year 2026, which would correspond to a multiple of 26.7.

Music streaming still a megatrend

The latest quarterly figures show that this is realistic. In Q3, the number of monthly active users increased by 11% to 713 million.

The number of subscribers climbed by 12% to 281 million.

Revenue from the subscription business climbed by 9% to EUR 3.83 billion. However, the advertising business declined by 6% to EUR 446 million - as is usual in the industry, this segment is subject to major fluctuations.

Nevertheless, gross profit increased by 9% to EUR 1.35 billion. The operating result even climbed by 28% to 582 million euros.

At EUR 806 million, free cash flow was well above the reported result and increased by 13% over the year as a whole

Spotify share: Chart from 16.01.2026, price: USD 508.04 - symbol: SPOT | source: TWS

Spotify has returned to the important support level of USD 500. It will now be exciting here. If a bottom is formed, this could enable a recovery towards USD 550.

A procyclical buy signal with possible price targets of USD 600 and USD 640 - 650 would be issued above this level.

However, if Spotify falls below USD 500, further price losses towards USD 450 should be expected.

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Reading time: approx. 9 minutes

Analysts enjoy a special status on the markets. Their price targets move shares, their assessments make the headlines and their models are used in fund decisions. However, those who use their forecasts without critically examining them often overlook the fact that analyst reports are not objective market barometers - but products with their own interests, assumptions and systematic distortions.

Empirical evidence shows: Analysts are surprisingly often wrong. A 20-year meta-study by the University of Iowa found that, on average, only around 47% of share price targets are achieved within twelve months. Even more clearly, the hit rate for the most optimistic forecasts was less than 30% in some cases. The much-cited EPS forecast is not infallible either - according to Refinitiv data, consensus estimates at the end of the year deviate on average by 8-12% from the actual result.

The problem lies less in the methodology than in the system. The majority of analysts work at investment banks, which also support issues or maintain business relationships with the analyzed companies. Negative ratings are rare there. According to FactSet, of over 14,000 recommendations in the S&P 500 universe, over 55% were recently "buy" and only 6% "sell" - an imbalance that can hardly be explained by optimism alone.

Example 1: $AMZN (+0.18%) (Amazon)

Before the dotcom bubble, the average price target for Amazon in March 2000 was around USD 100 - a few weeks later, the share price fell by 90 %. Even in 2014, when margins were shrinking and analysts were basing their models on short-term profits, 80% of the ratings were "hold" or "sell". Those who invested against the consensus back then multiplied their capital by 2020.

The pattern: analysts extrapolate the present into the future. In boom phases they overestimate growth, in crises they underestimate recovery.

Example 2: $TSLA (+2.75%) (Tesla)

In 2020, Goldman Sachs rated Tesla with a price target of USD 780 - when the share was at 400. Six months later, it had tripled. In 2022, many firms lowered their targets to below USD 200 after the share price had already fallen sharply. So the adjustment came after the movement. Analysts react, they rarely anticipate.

Example 3: $SPOT (+0.42%) (Spotify)

In 2022, major banks such as Morgan Stanley issued share price targets of USD 100 - on the grounds that the streaming model would remain permanently loss-making. Shortly afterwards, Spotify actually improved its gross margin and became operationally profitable. The share price doubled within a year. The estimates were correct, only the time horizon was wrong: analysts usually model twelve months, investors think five years.

Why this is the case

Analysts are caught between two worlds:

Sales and customer loyalty - their primary job is to provide institutional investors with information, not private investors. Their reports are part of a service designed to generate trust - not necessarily returns.

Reputation protection - If you deviate too much, you risk performing poorly in the rankings of the major data services (Institutional Investor). This is why many forecasts are within a narrow consensus band.

This leads to a herd instinct: the more analysts call a stock a "buy", the less anyone wants to deviate. Conversely, reputational pressure has a dampening effect in times of crisis - nobody wants to become bullish again too soon. As a result, analysts are often right in their diagnosis but wrong in their timing.

The most important companies and voices

A few companies dominate the global analyst landscape. In the English-speaking world, these include

• Goldman Sachs, Morgan Stanley, J.P. Morgan, Bank of America - with a strong weighting in institutional research.
• UBS, Barclays, Deutsche Bank, Credit Suisse (now integrated into UBS) - often with very sector-specific analyst teams.
• Morningstar - independent, with a focus on fundamental valuation (fair value models, "economic moat" approach).
• CFRA Research, Argus, Jefferies, Wedbush - smaller, but often more contrarian firms with a higher hit rate for second-line stocks.
• Bernstein Research is regarded as particularly analytical and quantitative - often with clear deviations from the mainstream.

Platforms such as TipRanks or Refinitiv StarMine, which track the performance of individual analysts over the years and make it assessable, offer an interesting addition. This shows, for example: The top 10% of analysts slightly outperform the market - the remaining 90% do not.

Which key figures really count

The classic recommendation ("buy", "hold", "sell") is striking, but superficial. The quantitative key figures in the background of the models are more meaningful. Some of them deserve more attention than the headlines:

EPS revision rate - measures how much earnings estimates are adjusted over time. Positive revisions correlate with share price increases.

Target price gap - the difference between the current share price and the average target price. A gap of over 20 % looks attractive, but is only relevant if the estimates remain stable.

Dispersion of estimates - wide spread between analysts indicates uncertainty; narrow range signals consensus (and therefore less potential for surprises).

Valuation spread - ratio between highest and lowest price target. Wide spreads are often found with disruptive companies (e.g. $TSLA (+2.75%) , $PLTR (-3.06%) ).

Earnings surprise rate - measures how often a company beats analysts' estimates. Companies with repeated "beats" (e.g. $V (+1.19%) , $ASML (-0.94%) ) enjoy a structural valuation premium.

These metrics are not a substitute, but a realistic corrective. While ratings contain emotion, ratios provide evidence.

Let's take $INOD (-2.38%) (Innodata). In 2022, the average price target was still USD 3, hardly anyone saw potential. When the AI hype began, the same companies revised their models - now the fair value was USD 9. The share price jumped to USD 13, not because the business tripled overnight, but because the analysts subsequently adjusted their assumptions.

Similarly with $NU (+2.09%) (Nu Holdings): Long labeled as an overpriced fintech, the tone changed as soon as profitability became apparent.

These examples show: Analysts are heavily calibrated with hindsight. The real opportunities lie where there is still no coverage or where the narrative changes.

Analysts provide valuable data points, but no direction. Their reports can help lay a foundation - but they are no substitute for your own assessment. It is crucial to understand how their models are created and what assumptions or conflicts of interest are at work in them.

Empirically, it can be stated: Analysts offer solid fundamental data on average, but weaken in terms of forecast quality and timing. The best strategy is therefore to use their analyses as input - but to consistently make your own judgment.

In other words: analysts draw the map, but each investor must determine the path for themselves.

How do you use analyst estimates? As a guide, as a counter-indicator or not at all?

Reading time: 11 minutes

My user name already reveals a certain affinity with music to those in the know. Music is something special for me - it accompanies, reflects moods and often stays where words end. So in this article, I take a look at the music industry from an investor's perspective: Where is value actually being created here, who is benefiting from the streaming boom, and which companies are making money from the return of great live experiences?

Music has always been a business with emotions - and with returns. Since streaming replaced the old model of CD sales, the industry has transformed into a global data and rights business. Today, it is no longer just artists, labels and concert promoters who earn money, but also investors who rely on digital platforms, rights catalogs and live experiences. The music industry is no longer a subject of nostalgia, but a sector with recurring cash flows, platform dynamics and the potential to remain one of the most profitable cultural industries in the coming years.

The pandemic was the stress test: physical events fell away, while streaming exploded. Since then, the sector has been growing twice over - online and on stage. According to the IFPI, the global music market has recently risen to over 28 billion US dollars, driven by more than 600 million paying streaming subscribers worldwide. However, it is not so much the volume that is decisive as the monetization. Anyone investing today should understand where the leverage lies: with platforms that control data and behavior - or with rights holders who profit from the same songs for decades.

A first obvious player is $SPOT (+0.42%) (Spotify Technology S.A.), the dominant streaming platform with over 600 million monthly active users. The business model is based on scaling: music rights are licensed, advertising revenues and subscription revenues increase linearly with the user base. After years of growth, Spotify is now entering the margin expansion phase. Price increases in core markets, new product levels such as "Superfan Clubs" and the integration of podcasts and audiobooks are shifting the model from volume to value.

Key figures: Revenue growth around 7% YoY, EBITDA margin ~11.6% → Rule of 40 ≈ 18.6%. PEG ratio approx. 2.1×, P/E ratio ~45, free cash flow yield approx. 1.5 %.

Spotify is therefore clearly below the ideal "Rule of 40" threshold - growth and profitability are solid, but not excellent. For investors: the story is intact, the model works, but the valuation requires sustainable operating leverage.

On the other side are the rights holders. $WMG (-0.99%) (Warner Music Group) is one of the three major labels worldwide, alongside Universal and Sony. Unlike Spotify, Warner owns the heart of the industry - the songs themselves. Revenues from streaming, synchronization, film rights and live events ensure predictable cash flows. Warner is not a high-growth stock, but a classic cash machine with a structural tailwind.

Key figures: Sales growth ~6.4 %, operating margin ~14 % → Rule of 40 ≈ 20.5 %. PEG ratio approx. 2.0×, P/E ratio ~34, free cash flow yield ~2 %.

Warner thus remains slightly below target, reflecting the more mature phase of the company: stable, but less dynamic. Margins are solid, the moat is real - music rights are not expiring. The fact that growth comes at a high price remains critical: Artist contracts are complex, catalogs are expensive, and the power of the platforms squeezes margins. Nevertheless, WMG is one of those companies that work with time, not against it.

Between these poles - platform vs. rights - a third market has emerged: the trade in music catalogs. Companies such as Hipgnosis Songs Fund, Round Hill Music and Kobalt have shown that music IP can be a predictable asset. The returns come from license fees and royalties, which continue to flow even during recessions. Private equity houses such as $BX (-1.25%) Blackstone and Apollo have long since stepped in. The idea behind it: Songs don't age, they are rediscovered - on TikTok, in series, in advertising. Anyone who owns unique rights to a handful of global hits has a kind of musical bond with inflation protection.

But the music industry does not end with rights and streams. Another anchor of growth lies in the physical experience - live events. Here dominates$EVD (+0%) (CTS Eventim AG & Co. KGaA) from Germany, Europe's largest ticketing and concert group. Eventim combines two highly profitable business models: platform and production. Through its ticket network, the company controls access to millions of fans, while at the same time acting as an organizer of festivals, arena shows and tours. Vertical integration - from digital booking to the stage - creates margin advantages and pricing power.

Key figures: Revenue growth ~6%, EBITDA margin ~19% → Rule of 40 ≈ 25%. PEG ratio difficult to compare (partly negative due to cyclical business model), P/E ratio ~29, free cash flow yield ~3 %.

Eventim is therefore also below the Rule of 40 mark, but impresses with its pricing power, network effects and cash flow strength. For investors, the Group offers a kind of counterweight to the digital models - real, scalable and relatively independent of the streaming cycle.

A comparison can be made: All three stocks are below the Rule of 40 threshold, but use different levers: Spotify via data and subscription economics, Warner via rights ownership and licensing streams, Eventim via live experiences and pricing power. Whoever invests in the music industry ultimately decides between platform, catalog or audience.

An alternative route is via the ETF $MUSQ which bundles companies along the entire value chain - from labels to streaming and live events. This is an efficient solution for investors who do not want to opt for individual shares. The ETF mixes well-known names such as Spotify, Universal, Warner and Live Nation with technology companies in the audio environment. The risk lies in the correlation: music is a small, highly concentrated market. If you want to diversify, you should be aware that these companies have similar global macro drivers - advertising market, consumption, interest rates, emotion.

Opportunities and risks are close together. The opportunities: The industry continues to grow, streaming revenues are increasing, live business is booming and music IP is becoming a strategic asset. The risks: Overvaluation, falling margins, regulatory pressure and platform power. The decisive factor will be who retains control over data and distribution. Those who only supply content will become interchangeable. Whoever controls access dictates the price.

For investors, a multi-stage approach is therefore a good idea: Platform stocks like Spotify for growth, rights holders like Warner for stability, promoters like Eventim for physical cash flow, specialized IP funds for passive income. Many shares trade at valuation premiums that presuppose long-term growth - but the structural demand for music remains. Streaming grows with every generation, rights do not become obsolete and live experiences cannot be substituted digitally.

Whether the music industry actually becomes a new defensive growth sector depends on the next cycle. If interest rates remain high, capital-intensive rights funds will suffer; if the economy picks up, streaming and live will benefit. However, music remains a consumer good with emotional value - and emotion sells, even on the balance sheet. Investors who want to invest in the soundtrack of the world have to decide whether they prefer to focus on data or content. On platform logic, rights ownership or experiences. Anything can work in the music industry - if you get the timing right.

Questions for the community:

How do you assess the relationship between digital and physical business models in the music industry?

Do you see Eventim as a structural beneficiary of the new live wave - or will streaming remain the dominant investment theme?

$SPOT (+0.42%)

🎵 Turnover: €4.27 billion (expectation €4.23 billion) ✅ +12 % YoY

💶 EPS: €3.24 (expectation €2.14) ✅

👥 MAUs: 713 million (expectation 710.6 million) ✅ +11% YoY

📈 Outlook (Q4):

- Sales: €4.5 billion (expectation €4.56 billion) ⚖️

- MAUs: 745 million (expectation 740.3 million) ✅

- Premium subscriptions: 289 million (+8 million QoQ)

- Gross margin: 32.9% (+130 bps QoQ)

- Operating result: €620 M (+7% QoQ)

- FX effect: -620 bps headwind

🎧 User numbers:

- Premium: 281 million (+12% YoY)

- Ad-supported: 446 million (+11 % YoY)

💰 Sales breakdown:

- Premium: €3.83 billion (+13% YoY, currency-adjusted)

- Advertising: €446 M (flat YoY, currency-adjusted)

📊 Further key figures:

- Premium ARPU: €4.53 (-4 % YoY, stable FXN)

- Ad margin: 18.4 % (+525 bps YoY)

- Premium margin: 33.2 % (-34 bps YoY)

- Operating profit: €582 M

- Gross margin: 31.6 % (+56 bps YoY)

💬 "The business is healthy. We are delivering faster than ever before - pricing strategies, innovation and the advertising business are driving growth and profitability." - CEO Daniel Ek

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I have to admit that the purchase $SPOT (+0.42%) back then was more out of emotional curiosity, without any great expectations or solid foundations.

Today, I think the potential has been exhausted. The valuation is high, the competition strong and the long-term outlook rather uncertain.

Time to secure the profit and close the position. Greed is not a good advisor - at best a nervous passenger. 😄

Thanks Spotify - it was a strong run!