: Value Investing Forum - Singapore, Hong Kong, U.S.

Full Version: Spotify Technology SA (SPOT)
You're currently viewing a stripped down version of our content. View the full version with proper formatting.
Spotify Is Considering an IPO Without Raising More Money

by Lucas Shaw
April 7, 2017, 3:35 AM GMT+8

Spotify Ltd., owner of the popular music streaming service, is considering listing its shares on public exchanges without raising any new money, according to a person familiar with the company’s plans.

Spotify, which surpassed 50 million paying subscribers earlier this year, doesn’t feel the need to raise capital but wants to allow long-term investors and employees to cash out, said the person, who asked not to be identified discussing private information. A direct listing would address those needs by letting investors buy Spotify shares from current owners on the open market. That approach would be different from an initial public offering, the more traditional route hot tech startups use to go public and raise money at the same time.

Spotify, founded more than a decade ago by Daniel Ek and Martin Lorentzon, raised $1 billion in debt two years ago, the same year its revenue surpassed $2 billion. The company is eager to escape the burden of that debt, a convertible loan that will cost the company more money the longer it delays going public. It’s unclear whether a direct offering would satisfy the conditions of the loan.

More details in
NYSE sets Spotify reference price at $132

Reuters Staff
April 3, 2018

(Reuters) - The New York Stock Exchange on Monday set the reference price for shares of music streaming service Spotify Technology SA at $132.

Spotify is pursuing an unusual direct listing to reach the public markets in place of an initial public offering, and shares are expected to start trading on Tuesday.

The reference price is not an offering price for the shares, nor is it the opening public price for shares of the Swedish technology company.

The opening public price will be determined by buy and sell orders collected by the NYSE from broker-dealers, the exchange said. Based on those orders, the opening price will be set based on a designated market maker’s determination of where buy orders can be matched with sell orders at a single price.

But the reference price will play a part in Spotify’s eventual pricing.

More details in
The audio Netflix?


And what we found is that as they got into Spotify and started listening, because of the platform, and because of the features, and because of the recommendations that we were offering, people started engaging a lot more. So the number of people that, from the beginning, said, “I’m never, ever going to pay for music,” because they may have come from a pirate environment that then slowly turned into, “This is just an amazing service. I’m getting so much value out of this. It’s a no-brainer to start paying.’”

My point by telling that story is that what we found so many times before is that the more people engaged, the more likely they are to pay. And the same is true with music as it is with podcasts, too. It’s really all about getting them onto the platform and starting to expose them to this entire ecosystem of creators and amazing content that we have on the platform. And once that happens, we know people eventually will convert into paying customers.
Since they do both ads and subscription, they are more like the YouTube of music.

For music, I have YouTube Premium; I feel that it's a much better deal, have more music that suits my taste, and a longer runway. 

(vested in Alphabet)
Spotify adds more subscribers, revenue rises on ad rebound

Reporting by Supantha Mukherjee in Stockholm Editing by Johan Ahlander and Mark Potter
October 27, 2021 5:21 PM +07

STOCKHOLM, Oct 27 (Reuters) - Spotify Technology SA (SPOT.N) beat Wall Street estimates for third-quarter revenue on Wednesday, as the music streaming company reported a 19% jump in paid subscribers for its premium service driven by demand in Europe and North America.

Premium subscribers, which account for most of the company's revenue, hit 172 million, just beating analysts' expectations of 171.7 million.

Total monthly active users rose 19% to 381 million.

Spotify earns from subscriptions and by showing ads to non-paying members. Revenue from ads, which fell at the height of the pandemic, jumped 75% to 323 million euros ($376 million), and the company is planning to hire hundreds of staff to further boost advertising sales.

Total revenue rose 27% to 2.50 billion euros, beating the 2.45 billion expected by analysts, according to IBES data from Refinitiv.

About 40% of Spotify's premium subscribers are based in Europe and 29% in the United States.

The company has also been investing heavily in its podcast business to rival that of Apple (AAPL.O) and in April launched a paid subscription platform for podcasters in the United States.

Spotify currently has 3.2 million podcasts on its platform, up from 2.9 million at the end of the second quarter.

More details in
Spotify is another pandemic darling whose star has fallen. It's business was never going to scale in a big way because it has to pay royalties for the music - the more subscribers, the more royalties they gonna pay (hence its low GPM). Not all platforms are the same.

Spotify Shares Now Selling at Less Than the IPO Price 4 Years Ago

The stock market’s negative reaction to the company’s recent quarterly report reflects this painful truth. It’s hard to find new subscribers nowadays, but the real anxiety among investors is the lousy profit margin at Spotify. The gross profit margin was 25.5%—perhaps acceptable for a run-of-the-mill business but disappointing for a dominant tech platform. Even worse, Spotify told investors that they don’t anticipate margin improvement in the current quarter.

By comparison, the gross profit margin at Microsoft is around 70%. The same is true at Pfizer. At Facebook it’s even higher—despite all Mark Zuckerberg’s strategic blunders, the gross profit margin is 80%. Spotify shareholders have been less ambitious, but even they were hoping for a margin in the mid-30s. But with more than 400 million active users, Spotify still can’t pull it off.