Spotify is a market leader in the music streaming industry.

Spotify Technology S.A. is a Swedish music streaming and media services, provider. The company was founded in Sweden mid-2006 and now owns around 36% of the online music streaming industry. This year the share price is up 55.6%. The recent rally has been due to signing of Podcasts for new content. Interestingly though this company has never turned a profit.

The financials of Spotify are mixed. Current market capitalisation is $41.45bn with 2019 revenue at $7.57bn. The company took a loss last year of $208.3m and a loss in 2018 of $92.1m. The balance sheet is good though. In 2019 Cash on hand was $1.967bn with total assets at $5.73bn. Liabilities came in at $3.45bn. This gave net positive assets of $2.28bn. Looking at Q1 2020 the numbers do look slightly better but instability still sits within the company. In Q1 revenue was $2.038bn with the company squeezing out a mere $1.1m profit. Available cash has shrunk $110m to $1.857bn and this has had an effect on the total assets which stand at around $5.54bn now. Total liabilities did drop the equivalent though to $3.32bn. This means that net positive assets are still $2.2bn.

Form a technical standpoint the shares are strong. MACD is positive and the shares trade outside of the upper Bollinger band - this means the stock could be deemed out of its limits and this is on the daily timeframe too. RSI is also overbought at 77 indicating the current price is too high at this given moment in time, on the basis of the past weeks. The last time the share price was overbought at these levels the proceeding days/weeks saw a 10% decline back to fair value. Trendline support sits below at $190 per share with further support at $160.

Overall the health of the company is good, but it would be desirable if the company turned a profit this year. This could help justify the price tag of $236 per share. On the basis of the past moves and the technicals, it is a fair point to argue this company is overvalued but again Q2 results could help justify such gains. From a technical standpoint the chart indicators suggest overbought conditions, therefore, stagnation or a decline could be possible.