QS Research · Michael Burry's Scion Capital analyst template · 2006
Spotify Technology S.A. (SPOT)
As of 2026-11-09 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +11% · downside -24% · upside +46%
Spotify is no longer the cash-burning podcast roll-up of FY2020: FY2025 produced €2.20B of operating income (N14), €2.87B of free cash flow (N20) and net cash of €8.01B (N25), and Q3 2026, reported 2026-10-22, delivered €4,969M of revenue (+16% YoY), a record 33% gross margin and €672M of operating income on 306M Premium Subscribers (S27, S30). What the price already pays for is the rest of that ramp: at $603.01 the stock is on 44.9x FY2025 EV/EBITDA and 50.3x P/E versus 9.4-20.7x EBITDA and 12.1-20.7x earnings for every scaled peer, on a 2.6% FCF yield and a share count that rose 6.5% in three years despite €439M of FY2025 buybacks (N29, N32, N33, N6, N21, S1). Holding today's 44.9x on the $19.16B revenue base, a 15% EBITDA margin gives $129.0B EV + $8.93B net cash = $137.9B / 205.83M shares = ~$670 (+11.2%), a 10% margin gives ~$461 (-23.5%) and a 20% margin gives ~$879 (+45.8%) (N12, N8, N27, N5), which is roughly symmetric risk/reward, not a 30% base-case gain. That is a watch rather than a long: I want either a lower entry toward the $405 52-week low (N2) or proof that the 33% gross margin converts into a durable mid-teens EBITDA margin before paying 45x for it.
Key numbers
- Share price: $603.01
- Market cap: $124.12B
- Latest financial period: FY Dec 2025 to Dec 31, 2025
- Revenue (FY Dec 2025): €17.19B
- EV / EBITDA (FY Dec 2025): 44.9x
- P/E (FY Dec 2025): 50.3x
- Price / book: 13.37x
The 15 boxes
- ✓ 1. Long-form business notes
Spotify runs two revenue engines off one audio platform: Premium subscriptions (price x subscribers, plus per-subscriber partner deals) and Ad-Supported impressions (display, audio, video, CPM and programmatic). Scale at December 31, 2025 was 751 million MAUs and 290 million Premium Subscribers in 184 countries, versus 345 million MAUs and 155 million Premium Subscribers in 93 countries at December 31, 2020. Over that span revenue went from €7.88B (FY2020) to €17.19B (FY2025) and operating income from -€293.0M to +€2.20B, while the content strategy shifted from buying podcast studios in 2019-2020 to audiobooks from 2022 and video by FY2025. The newest figures here are FY2025 (year ended December 31, 2025); no 2026 quarterly figures appear in these sources.
- ✓ 2. Competitive advantage
Spotify has real scale and cost advantages on the music side — FY2025 revenue of €17.19B against €7.88B in FY2020, gross profit up from €2.02B to €5.50B, and operating income of €2.20B after losses as recently as FY2023 — but the 20-F itself says the moat is contested: Apple, Alphabet and Amazon own the devices and app stores and can preload their own services, which the company calls a 'significant competitive disadvantage'. The advantage that remains is personalization/data and the two-sided user-creator-advertiser scale, not licences (it licenses content from labels) and not exclusive hardware. Margins have improved sharply (gross profit €5.50B on €17.19B of FY2025 revenue vs €2.02B on €7.88B in FY2020) but that is a three-year improvement, not a decade of high returns, and it is in EUR while the shares trade in USD. All figures here are FY2020-FY2025 from the XBRL set (period ended 2025-12-31); the sources contain no Q3 2026 or TTM figures.
- ✓ 3. 10-Q takeaways
The latest 6-K (dated 2026-10-22) shows Q3 2026 revenue of €4,969M, up 16% YoY, with Premium +17% to €4,487M and Ad-Supported +10% to €482M; consolidated gross margin was 33% vs 32%. Users were 788M MAUs (+11%) and 306M Premium Subscribers (+9%) at Sep 30, 2026, and Q3 Premium ARPU rose 9% to €4.95. Operating expenses grew faster than revenue in R&D (+35%) and G&A (+30%), while finance income fell €200M because Q3 2025 contained €197M of Exchangeable Notes fair-value movements; the excerpt has no cash, buyback, inventory or guidance figures.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ○ 9. Insider trading interpretation
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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