Is Spotify Technology SA overvalued or undervalued?

As of 12 November 2024, Spotify Technology SA has moved from an expensive to a fair valuation grade. The company is currently fairly valued, with a P/E ratio of 92, significantly higher than its peers such as Alphabet, Inc. at 21.13 and Meta Platforms, Inc. at 26.26. Additionally, Spotify's EV to EBITDA stands at 70.80, while Alphabet's is notably lower at 15.44, indicating a premium valuation relative to its competitors.
Despite the high valuation ratios, Spotify's PEG ratio of 0.07 suggests potential for growth that may not be fully reflected in its current price. The company's return on equity (ROE) is a strong 23.47%, further supporting its fair valuation status. Recent performance shows that Spotify has outperformed the S&P 500, with a year-to-date return of 63.43% compared to the S&P's 2.44%, reinforcing the notion that the stock may be positioned well for future growth despite its current valuation metrics.