Spotify Stock Price (NYSE: SPOT) Continues To Set New Highs, Up 36% YTD

Spotify's stock price (NYSE: SPOT) has started 2025 with a bullish wave, gaining 36% through the early part of the year to bring 12 month gains to an impressive 169.92%. The most recent move to the upside has come on the back of earnings, as fundamentals continue to drive sentiment higher. In yesterday's trading session, SPOT made new 52 week and all time highs of $630.77as the price discovery phase in the breakout continues at pace.

The company reported a remarkable performance in Q4 2024, achieving its highest-ever quarterly results and seeing strong gains in key metrics of revenue, subscribers, and monthly active users.

In terms of financial performance, Spotify's total revenue reached EUR 4.2 billion, reflecting a 17% year-on-year growth when adjusted for constant currency. This growth was largely driven by a 19% increase in premium revenue. Meanwhile, advertising revenue grew by 6% on a currency-neutral basis. The gross margin for the quarter was 32.2%, exceeding the company’s guidance by 40 basis points. Operating income for Spotify stood at EUR 477 million, while free cash flow amounted to EUR 877 million. The company reported a strong liquidity position with cash and short-term investments totalling EUR 7.5 billion.

User growth also saw impressive figures, with monthly active users climbing to 675 million, an increase of 35 million. Spotify also added 11 million net subscribers, taking the total to 263 million. The number of net additions represented the platform’s best Q4 performance in terms of monthly active users and subscriber growth.

Technological innovations played a crucial role in Spotify's performance. The company's investments in video and audiobooks significantly contributed to its growth, with more than 330,000 video podcasts available globally. A notable 270 million users engaged with these video podcasts. The ‘Wrapped' campaign further enhanced user engagement, involving over 245 million users, the highest ever for the campaign.

Looking ahead, Spotify plans to focus on expedited development in 2025, aiming to deliver improvements at a faster pace and invest further in core music experiences. The competitive landscape is favorable, as Spotify benefits from the market exit of several competitors in developing regions. Furthermore, a new agreement with Universal Music Group is expected to aid Spotify in scaling its services and increasing profitability. While the company faces challenges in advertiser spending and transitioning to programmatic advertising, plans are underway to scale such operations by 2026.

The company anticipates a seasonally weaker Q1 2025, which is expected to impact revenue and gross margins. Nevertheless, Spotify remains confident in its strategic initiatives and growth prospects for the future, with a strong emphasis on shareholder returns and business investment. It seems for the time being at least that the firm can do no wrong in the eyes of markets.