Let me first discuss the well-known bullish thesis before discussing my unique one.

Sure, the stock trades at 1.7x sales, but gross margins are low at 25.2% and the company still isn’t generating meaningful earnings. The stock might not look obviously cheap here. The company ended the quarter with $3.5 billion of cash, $682 million of equity investments, and $1.1 billion of 0% exchangeable notes due 2026 (convertible at a price of $515.20 per share). The company operated close to breakeven on an operating margin perspective and generated $22 million of free cash flow. These led to revenues growing 24% year over year. SPOT saw continued growth in the first quarter with total users jumping 19% year over year and premium subscribers jumping 15% year over year. This is a great opportunity to buy into a long-term winner at a cheap price. With the stock now trading at $107 per share, the stock trades lower than both its first day of trading as well as its $132 first day reference price. After soaring to around $350 per share in early 2021, the stock has since crashed by 70%. SPOT came public in April of 2018 via direct listing and closed its first day of trading at $149 per share. I rate the stock a buy for prospective long-term investors. I detail why cash flows can soar over the long term as well as potential obstacles in the path. With the stock down 70% from all-time highs, the stock is now looking quite compelling considering the strong financial position and clear-cut path to strong operating leverage. The ongoing tech crash has brought, among a mixed set of emotions, a fresh set of buying opportunities including one in SPOT stock. Spotify ( NYSE: SPOT) is a name which I have not covered before, largely because the stock never traded at a valuation that resonated with me.

Spotify stock down