It doesn’t matter if you have $500 in savings or $5 million. Stock Prodigy Who Found NIO at $2… Says Buy THIS He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn. stocks and has his own stock market blog at. Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines. But having an overpriced stock will be too challenging as the Federal Reserve will tighten its monetary policy and the dominant theme for 2022 will shift from growth to value. Spotify has made huge steps toward achieving profitability. That’s true even as there are less than 20 days before it releases its next earnings report. Taking valuation into account, SPOT stock is very expensive and is not a Buy now. Spotify has a Price / Sales (FWD) ratio higher difference of 40.80% and a Price / Cash Flow (FWD) ratio higher difference of 469.45% versus the median values of the Communication Services sector. What about Price / Sales (FWD) and Price / Cash Flow (FWD) ratios? I have chosen the free cash flow ratio, especially because Spotify, despite its losses, generated positive free cash flows that are highly encouraging. Take for example the EV / EBIT (FWD) ratio for SPOT stock which is 1,744.61, a staggering 10,897.66% difference from the median value of the sector.ħ Water Stocks to Buy as the World Fights for the Next Scarce Resource Most key ratios both on a TMM basis and on a forward valuation for SPOT stock show a very large premium to its sector median values. The Communication Services sector median value for EV / Sales (TTM) and EV / Sales (FWD) are 2.35x and 2.21x, respectively. Compared to the Communication Services sector, Spotify has only a minor discount on its EV / Sales (TTM) ratio and EV / Sales (FWD) ratio of 2.31x and 2.02x, respectively.

Valuation is either forward-looking or based on what happened in the past quarters or twelve months. This is a huge figure as financial metrics used in valuation should be as low as possible to make a stock attractive. Furthermore, it has a P/E GAAP (FWD) of 1,641.93. Spotify has been losing money for the whole period from 2017 to 2021.

Spotify stock rebound