Apple, NASDAQ:AAPL, Carter Worth, Options Action, NASDAQ uld You Buy Spotify Stock in 2021? (SPOT)
Should you buy this stock in 2021? So i hope you guys enjoy it and if you get anything in value, hit the like button, because it really really helps me out. If you have any questions or concerns, go ahead and ask them in the comments. And if you guys want to learn more about investing in the stock market, i do have a course, and you guys can use promo code dividends to get 50 off so at least check it out. Roll the intro let’s go Music. So now, for those of you that don’t know what spotify is spotify is a music and podcast streaming service and there’s really two options. You guys have you, can have the free option and you can listen to ads before your songs or your podcast, or you can pay around ten dollars per month and really have access to any podcast any song and no ads and that’s what spotify is broken down. Now this company has had amazing growth in 2020 and we hope, as investors, that the momentum continues to go into 2021. So now let’s break down some of the fundamentals, so the fundamentals in a business is pretty much like the balance sheet. It’S, all of the price to earning ratios, it’s everything you really need as a fundamental investor for the future. So now, the year to date, revenue growth is up 17, so the company is growing at a pretty rapid rate, and with that growth you always hope it still has some pretty solid margins, and let me tell you, the gross margin on this thing is pretty solid.
Coming in at 25, so what that means is for every hundred dollars spotify brings in they actually profit 25, and this is actually pretty high for a company. If you compare it to tesla or really any other um new startup company, that is a growth stock. They have very, very low margin rates and it’s honestly pretty cool to see this one have a solid profit margin so now another ratio to determine a growth stock. If you should buy it or not, is called the price to sales and spotify has a price of sales that are on 6.3, and this is kind of a little higher in my opinion than i would like, but obviously with that as a growth stock, you always Pay a little more right now in hopes that this stock will continue to go up in the future. Another really cool fact about this company here is they have a 144 million premium users, so 104 million times ten dollars per month is how much they are making on a monthly basis, so it’s very, very large, the company’s growing at a very, very rapid rate, not To mention they’re getting more and more premium exclusive. Now another really cool fact about this company. Is they have 144 million premium users? So these are the users that are spending that 10 per month, so you can pretty much count on cash flow coming in with these premium users and they have over 320 million free users.
So these are going to be the users that they actually send ads to and that’s how they make money is from the ad revenue. So i do think both of these concepts are really cool, because you can have a free program still make money on it. You can have a premium program and still make money on it. I think it’s a really really cool business plan, so now there’s a couple things that i really don’t like about this company, the one it’s not profitable. Yet me personally, i like to get in stocks that are a little profitable, because i can count on the company either saving more cash. You know having lowered that, obviously, when a company is profitable, just healthier for the business and for the business plan number two, it has a negative price to earnings. This is pretty bad for a company to have the reason. Why is because you’re going to be spending so much money and obviously, when a company has a negative price to earnings the risk with it goes way up. So, obviously, with that, i think it’s always smart to have a nice solid base of etfs bonds or even blue chip stocks to almost act as like a defense when you invest into spotify. I personally think that spotify does carry a lot of long term risk and, with that i’m going to be investing roughly around 2 000 into this company here and another fantastic strategy for spotify is dollar cost averaging.
The reason why is because, with growth stocks there’s a ton of volatility with it in dollar, cost averaging, you can use that volatility to your advantage. What it is you pretty much figure out how much you want to invest so let’s say you want to invest a thousand dollars into spotify instead of putting up a thousand dollars all up front. What you will do is pretty much invest a hundred dollars per week over the next 10 weeks or 10 months, so you’re still investing that total thousand dollars, but you’re spreading it out into monthly weekly increments. So it gets a good average price for your shares. So if spotify continues to go up, you’re still making money and if it falls down all you’re doing, is just averaging your price down lower. So now that we kind of have a good idea of spotify a good investment strategy. Now let’s talk about some of the technical analysis, let’s, look at support resistance and where i see it in the future, let’s go alrighty guys. We have ticker symbol spot. This is spotify stock ticker. So if you ever want to look it up or invest into the company here, that is the ticker to find it on the exchange. So now you guys can see that we have some lows here at 142 dollars per share really exploded in buying pressure, hitting some highs here at about 300 dollars. That is acting as some very very hard resistance and now some new support here, because you guys can see it really comes in contact almost multiple times and we do get sell off.
So that is that overall, resistance is when it sells off at that price. Now it looks like it fell down in here and did find some overall strong support at around uh 225. You guys can see it hit it multiple times and we get buying pressure entering this stock. Here then, right in here we had a beautiful resistant breakout. Look at that huge candle wick. You guys can see that huge price action happened in four hours: okay, because each candlestick is a four hour um time period, so you guys can see it really exploded. And now it looked like it created some new highs here at 370 dollars. Now me, i am going to be doing a one lump sum. Investment of two thousand dollars, because i do feel like spotify, does carry a lot of long and short term potential. The reason why i say short term is because looking at the rsi, it is undervalued and almost every time it comes in contact with this 30. You guys can see right down in here. We did get buying pressure so that short term potential okay comes in contact down in here and we get that short term buying pressure. Okay, so any time it you know is undervalued on the rsi. We do get a lot of buying pressure entering this position here. You guys can see that today it did fall around 6.5. You know i don’t know if there’s some sort of fundamental catalyst most the time there is, but as a long term investor you know you don’t, really care about these day to day price movements.
You care about any any time. Stock falls so much all you’re going to do is just average your price down, and i do think with this fall. This is going to be bringing a lot of opportunity, not to mention spotify just signed multiple deals exclusively with a ton of podcasters, joe rogan addison ray and a variety of other um social media influencers. So now they’re get good they’re going to be getting a lot more users coming to their platform just from them. I do think that is a perfect investment strategy really going to be putting a huge damper in on the entertainment industry. Not to mention there is some rumors spotify is going to be doing a video um thing on their app where you it’s going to be a huge competitor with youtube. So i do think that is a huge thing. Spotify could do and probably will end up doing here in the short term. I think this stock is going to be killing it for the next. You know three to five years and i am looking forward to it. So that is it, though. I hope you guys enjoyed the episode and if you did hit the like button and go ahead and check out my course we’ll see you guys tomorrow, remember to stay, happy, stay positive and especially now stay safe out.