Spotify today filed to go public and plans to begin trading on the New York Stock Exchange under the name SPOT, reports CNBC. Shares of the company have privately traded as high as $132.50, giving the company a valuation of ~$23 billion based on ordinary shares traded in private transactions.
According to Spotify's filing with the SEC, the streaming music service boasts 159 million monthly active users and 71 million premium subscribers as of December 31, 2017, which Spotify claims is "nearly double the scale" of its closest competitor, Apple Music.
As of the last update at the beginning of February, Apple Music boasted 36 million paying subscribers.
Spotify says its number of premium subscribers has grown 46 percent year over year, and its monthly active users has grown 29 percent year over year. The company earned $2.37 billion in 2015, $3.6 billion in 2016, and $4.99 billion in 2017, but posted a loss of $1.5 billion in 2017.
Spotify also says it is able to draw consumers because it provides "unique data" for a differentiated and personalized experience.
Many music services have large catalogs, but we believe Spotify is differentiated from other services because we provide Users with a more personalized experience, driven by powerful music search and discovery engines. We have a large and growing base of Users that are highly engaged on Spotify, which enables us to continuously learn about their listening behaviors throughout the day.
We use this information to create a more personalized and engaging experience for each incremental visit to our platform. We believe this personalized experience is a key competitive advantage as Users are more likely to engage with a platform that reflects their real-time moods and activities and captures a unique understanding of moments in their lives.
Going forward, Spotify plans to grow its business by heavily investing in research and development, further penetrating into existing markets, entering new geographies, continuing to invest in its advertising business, and expanding non-music content.
Spotify is going public through a direct listing, which means the company did not hire an underwriter and thus there is no set opening price for Spotify shares.
Top Rated Comments
Spotify seems to have a startup mentality - "just get users and we'll figure out how to make money later"
The problem is... they've been around for a decade... have tons of users and plenty of money coming in... yet their costs keep skyrocketing.
They literally spend more than they make. And they have to spend more as they get more users.
This is a different situation than say, Facebook, where they eventually settled into a position to make money. Facebook makes money on advertising from eyeballs and pageviews. That's an appropriate business model for this type of company. The more users Facebook has... the more money they make.
But it's the opposite for Spotify. More users actually costs them more money.
It's been suggested that Spotify get rid of their free tier... as that may be the reason they lose so much money.
But that would instantly cut their userbase in half. Investors surely wouldn't like that. (after all... users are what these "startup" companies are all about, right?)
This will be interesting to watch. I'm glad I'm not making their decisions!
Spotify is like the early Amazon, they wrote big red-ink until 2009. In a crowded market, the only way to dominate is to go thru an extended period of losses. Lots of investment from deep pockets in it for the long-haul.
What's unfortunately missing from this MR piece, is that the 2017 loss was largely due to their 1 time expense of gaining access to the Chinese market with their $1billion stock swap deal with Tencent and their entertainment division TME.
It's not a simple user-growth-loss story, but an overall market expansion story. I'd say they'll write profits by 2019-2020.
Not sure why you "loathe" Spotify. Zealous AM fan ?
For those of you rooting for Spotify to fail, be aware, that less competition generally means higher prices once a monopoly is established and then what would you complain about ?
MR's become a cesspool of whiners and blind Apple zealots.
I can't wait to short the hell out of this
[doublepost=1519854298][/doublepost]they’re profitable. Ultimately they’ll have a monopoly on streaming and probably reach 50bn in revenue someday. It takes time to build the infrastructure until they become profitable. It’s all about growth race right now - all their money is going into beating the default installed Apple Music and others.
[doublepost=1519854406][/doublepost]Did you frequent the Discover Weekly playlist? Or the “Release Radar”? Their algorithms are literally hundreds of times better at suggesting music than any other company out there, and I’m willing to bet a significant amount of their money went to AI research. You sound like a paid AM employee as well.