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Spotify: Extreme Optimism Fuels Unreasonable EPS Consensus Projection
Summary
- Despite Spotify's large user base, I believe Spotify is overvalued at a TTM P/E of around 111X.
- The market overestimates Spotify's competitive moats and is too optimistic about the price-hike strategy.
- I forecast a 53.4% EPS miss in 2025Q2, driving a 53.2% downside, indicating a short-selling opportunity.
I’m a first-year Risk Management and Business Intelligence student at The Hong Kong University of Science and Technology. My experience creating investment pitch decks for case competitions and investment societies sparked my passion for financial modeling and investment research. Adopting a long/short value investing strategy, I rely on rigorous bottom-up fundamental analysis to uncover mispriced opportunities in the market. I thrive on breaking down business models, assessing competitive advantages, and pinpointing operational inefficiencies that others may overlook. Beyond my technical skills, I am driven by a desire to continuously refine my financial expertise and contribute high-conviction investment ideas. I am eager to bring my analytical rigor and enthusiasm to the community and learn from professionals!
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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