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SPOT, ad sales jump
Target price USD320
Last 12-month cashflow +USD 180 million
February 6th,, 2021
1 minute read
Sales
Sales growth accelerated to +10% in the fourth quarter & USD 2.17 billion from +5% in the third quarter, 3% ahead of our forecast. Most of the growth is from advertising. The average quarterly growth is +4%. We expect quarterly growth to accelerate to an average +5% & sales to rise to USD 2.66 billion by the fourth quarter 2021.
Cashflow
Fourth quarter cashflow was USD 72 million, from USD 105 million in the third quarter & a quarterly average USD 45 million, but most of that has been from positive wronging capital. We use investment spending of USD 26 million, which when combined with higher sales, gives a slightly higher quarterly average USD 46 million in this next 12 months.
1 minute read
Sales
Sales growth accelerated to +10% in the fourth quarter & USD 2.17 billion from +5% in the third quarter, 3% ahead of our forecast. Most of the growth is from advertising. The average quarterly growth is +4%. We expect quarterly growth to accelerate to an average +5% & sales to rise to USD 2.66 billion by the fourth quarter 2021.
Cashflow
Fourth quarter cashflow was USD 72 million, from USD 105 million in the third quarter & a quarterly average USD 45 million, but most of that has been from positive wronging capital. We use investment spending of USD 26 million, which when combined with higher sales, gives a slightly higher quarterly average USD 46 million in this next 12 months.
Sales growth accelerates, cashflow positive, but expensive, lower target price...
Balance sheet
The balance sheet net leverage of cash minus total liabilities was at -USD 2.37 billion in the fourth quarter from -USD 2.12 billion in the third quarter & -USD 2 billion a year ago. With our forecast for higher free cashflow & assuming there’s no dividend payout, the net cash will be at -USD 2.18 billion in 12 months time.
Profit
The net loss was higher in the fourth quarter, -USD 125 million from -USD 101 million in the third. Non-cash costs were flat, the cash costs ratio, net profit add non-cash costs minus sales as a percent of sales was higher, 100%. We use 97% costs as sales rise to predict a lower next 12 months loss -USD 153 million.
Value
SPOT has raised a net capital of USD 221 million in the last four years. At the current market value of USD 48.7 billion, it’s 5X sales, 3.76X assets, 18.26X equity with no profitability or yield yet. Our free cashflow forecast is USD 229 million. At 1.6% with a high 3.5X adjustment gives a slightly higher target price of USD320.
The balance sheet net leverage of cash minus total liabilities was at -USD 2.37 billion in the fourth quarter from -USD 2.12 billion in the third quarter & -USD 2 billion a year ago. With our forecast for higher free cashflow & assuming there’s no dividend payout, the net cash will be at -USD 2.18 billion in 12 months time.
Profit
The net loss was higher in the fourth quarter, -USD 125 million from -USD 101 million in the third. Non-cash costs were flat, the cash costs ratio, net profit add non-cash costs minus sales as a percent of sales was higher, 100%. We use 97% costs as sales rise to predict a lower next 12 months loss -USD 153 million.
Value
SPOT has raised a net capital of USD 221 million in the last four years. At the current market value of USD 48.7 billion, it’s 5X sales, 3.76X assets, 18.26X equity with no profitability or yield yet. Our free cashflow forecast is USD 229 million. At 1.6% with a high 3.5X adjustment gives a slightly higher target price of USD320.