Meanwhile, earnings will improve over time. And with a strong balance sheet (nearly $2 billion in cash and investments and no debt) the company actually announced a $1 billion repurchase program in November. For one, Spotify is generating positive free cash flow. It’s too simplistic to argue that Spotify is overvalued simply because the company is posting negative earnings. Investors choosing either side must do so with conviction. Increasingly, Spotify looks like a binary play. And it’s not clear that Spotify has the ability to fight them off. Giants are targeting the streaming music space. And at some point, Spotify should be able to raise prices, further boosting margins. Profitability will come at some point as the company leverages largely fixed costs. With SPOT down 43% from its highs, the bull case perhaps looks more intriguing. The bull case for SPOT stock seems almost equally obvious: the company already has 83 million paying users and continues to post impressive growth. The bear case for Spotify stock seems obvious: the company is losing money and facing intensifying competition. Spotify (NYSE: SPOT) is one of the more interesting stocks in the market.
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