Discounted Cash Flow Valuation of Spotify

Master's Thesis from the year 2019 in the subject Business economics - Investment and Finance, University of Lodz (LODZ UNIVERSITY OF TECHNOLOGY), language: English, abstract: This work contains a theoretical model that describes one of the many possible future outcomes of Spotify as an investment. The author attempts to measure the value of the digital platform using a DCF valuation model. The work begins with the basic theoretical requirements of a DCF model. Then Spotify s company history, market environment and business model will be studied. Afterwards the author s assumptions and expectations in regard to the company s future financial performance will be explained. The fourth chapter contains the empirical discounted cash flow valuation model. Moreover, the work deals with discounted cash flow valuation concepts of growth, reinvestment and risk and different approaches towards them. Spotify s history, mission, vision and values will be analyzed afterwards. The next chapter outlines the assumptions driving revenue growth and reinvestment and compiles the main operational and strategical risks the company faces. The work concludes with an explanation of the actual application of the discounted cash flow model utilized to value Spotify Technology S.A.