Christoffer Jennel has written preliminary comments on Spotify, which will publish its Q1 report on Tuesday, April 28. 
We expect the company to demonstrate continued operational development characterized by stable user growth and strong profitability improvement. While reported revenue growth still faces significant currency headwinds, we anticipate the underlying business to remain strong, supported by recent pricing actions in the US and a continued focus on AI-powered operational efficiencies. Our Q1 expectations are largely in line with the company’s guidance, although we have raised our EBIT forecast due to the impact of the negative share price development (-17%) in Q1 on social security contributions. Following the recent strengthening of the share price, some of the upside we saw has already materialized. Spotify is currently trading at the lower end of our acceptable valuation ranges (EV/FCFF 26’: 24x, EV/EBIT: 28x, EV/GP: 12x), which still leaves upside potential for the stock. However, due to the recent share price increase, we are lowering our recommendation to “add” (previously “buy”), leaving our target price unchanged at USD 595.