We feel now is a pretty good time to analyse Spotify Technology S.A.'s (NYSE:SPOT) business as it appears the company may be on the cusp of a considerable accomplishment. Spotify Technology S.A., together with its subsidiaries, provides audio streaming subscription services worldwide. The US$62b market-cap company's loss lessened since it announced a €532m loss in the full financial year, compared to the latest trailing-twelve-month loss of €110m, as it approaches breakeven. The most pressing concern for investors is Spotify Technology's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts' expectations for the company.

Spotify Technology is bordering on breakeven, according to the 31 American Entertainment analysts. They expect the company to post a final loss in 2023, before turning a profit of €937m in 2024. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 41% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Spotify Technology's growth isn't the focus of this broad overview, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there's one aspect worth mentioning. The company has managed its capital prudently, with debt making up 38% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Spotify Technology, so if you are interested in understanding the company at a deeper level, take a look at Spotify Technology's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

1. Valuation: What is Spotify Technology worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Spotify Technology is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Spotify Technology's board and the CEO's background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com