Why hasn't SPOT gone anywhere since IPO?
Spotify $Spotify Technology S.A.(SPOT)$
I'll show you SPOT's history in 7 charts.
1. Revenue
2. Margins
3. OpEx
4. Net Income and FCF
5. Segment Revenue
6. Segment GM
7. MAUs
Let's go!📈👇
1.Spotify's revenue growth has been steady since IPO, but that's not what investors question.
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2.Margins are the biggest challenge for Spotify and they're limited by content deals (more on this below).
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3.Operating expenses have been another challenge. Management has grown opex as the company has grown, meaning no operating leverage. Has that changed in the last quarter?
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4.FCF has long been positive, but net income? Non-existent.
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5.Here is a look at premium and ad revenue. Ad revenue is growing more quickly than premium, but it's a slow journey to catch up.
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6.I mentioned margin challenges above and here they are: 1. Music margins are limited because ~70% of revenue is shared with labels. This is the (green) premium margin below. 2. Ad margins (black) have...been terrible.
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7.The good news is that users love Spotify!
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I think Spotify can beat the market IF:
1. Ad revenue and margins improve.
2. Opex stays ~flat over the next 5 years.
https://twitter.com/TravisHoium/status/1717169950488482072
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