Let's talk about the popular Spotify Technology S.A. (NYSE:SPOT). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$327 at one point, and dropping to the lows of US$272. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Spotify Technology's current trading price of US$295 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Spotify Technology’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Spotify Technology

Is Spotify Technology Still Cheap?

According to our valuation model, Spotify Technology seems to be fairly priced at around 3.5% below our intrinsic value, which means if you buy Spotify Technology today, you’d be paying a fair price for it. And if you believe the company’s true value is $305.66, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Spotify Technology’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Spotify Technology?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With revenues expected to grow by 50% over the next couple of years, the future seems bright for Spotify Technology. If the level of expenses is able to be maintained, it looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in SPOT’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?