Read on Twitter
1/ Thread on $SPOT:
2020 was a breakout year for Spotify (+100%) but the stock is only up ~90% since IPO
Here's the bull-case and why I think the company is just getting started:
2020 was a breakout year for Spotify (+100%) but the stock is only up ~90% since IPO
Here's the bull-case and why I think the company is just getting started:
2/ Audio is a massively under-monetized medium.
Spotify's mission and opportunity is to narrow the gap between attention and spend
Spotify's mission and opportunity is to narrow the gap between attention and spend
3/ Why now and why Spotify? Reach and focus.
By the end of this decade, Spotify will have >1.2bn MAUs, making it one of the largest consumer platforms
Unlike its predecessors, Spotify is acutely focused on monetizing the >2 hrs/day consumers spend listening to music/podcasts
By the end of this decade, Spotify will have >1.2bn MAUs, making it one of the largest consumer platforms
Unlike its predecessors, Spotify is acutely focused on monetizing the >2 hrs/day consumers spend listening to music/podcasts
3/ Spotify monetizes its platform and users in three buckets:
Premium Subs
Advertising
Marketplace
The pool of revenue available is each bucket is quite large and will continue to grow as Spotify further unlocks pockets of advertising/consumer dollars
Premium Subs
Advertising
Marketplace
The pool of revenue available is each bucket is quite large and will continue to grow as Spotify further unlocks pockets of advertising/consumer dollars
4/ As streaming and podcasts continues to take "share of ear", advertising dollars will naturally shift towards streaming/digital audio platforms.
As the dominant player in the ecosystem, Spotify stands to capture a disproportionate % of those incremental dollars
As the dominant player in the ecosystem, Spotify stands to capture a disproportionate % of those incremental dollars
5/ The bet on podcasting is only a few years old but is strategically and financially important to its platform
@benthompson wrote about the opportunity for Spotify to be a centralized platform in podcasting and the opportunities the company could unlock: https://stratechery.com/2019/spotifys-podcast-aggregation-play/
@benthompson wrote about the opportunity for Spotify to be a centralized platform in podcasting and the opportunities the company could unlock: https://stratechery.com/2019/spotifys-podcast-aggregation-play/
6/ Additionally, we are very early in the maturity of the podcast advertising ecosystem
@_inpractise has a great thread/interview on the opportunities in the podcast advertising ecosystem: https://twitter.com/_inpractise/status/1301157812823785474?s=20
@_inpractise has a great thread/interview on the opportunities in the podcast advertising ecosystem: https://twitter.com/_inpractise/status/1301157812823785474?s=20
7/ The "Two-Sided Marketplace" is a very new but strategically important bet for the company
With Marketplace, Spotify is creating a toll-road asset that connects artists/labels to consumers. Having access to this discovery platform will be very important to artists and labels
With Marketplace, Spotify is creating a toll-road asset that connects artists/labels to consumers. Having access to this discovery platform will be very important to artists and labels
8/ Marketplace likely won't be a meaningful top-line contributor in the near-term but will give Spotify meaningful leverage on the labels over the next decade, which should help in future royalty negotiations
9/ Full-write up here with more discussion on the long-term Spotify opportunity. Includes discussion on premium business, long-term churn, and the company's pricing power https://investingcanon.substack.com/p/spotify-music-to-my-ears
