Wednesday, July 20, 2016

The Time For Spotify's IPO Was Just Revealed - If It Can Prove Its Worth In Time

Via Business Insider:

Bloomberg cites five anonymous sources working at Spotify who claim that the company is aiming at a stock market flotation during the second half of 2017, contrary to founder Daniel Ek's recent claim that he doesn't intend to sell the company.

While that answers a long-standing question it does leave another one unanswered: Can Spotify live up to its valuation?

Spotify's was last valued at $8 billion dollars.

That's quite a lot considering Spotify has never once turned a profit in its ten year history. And as Bloomberg problematizes, if Spotify can't make ends meet, why would investors?

In order to live up to its astronomical valuation Spotify will have to show that it is actually a viable company. Amidst rising competition - particularly from Apple Music - Spotify will have to haggle down fees to record labels, which presently eat away more than 50% of revenues, and show that music streaming isn't a fleeting phenomenon.

Spotify is still growing at a quick pace, reportedly adding 10 million paying subscribers in the last year, as well as going from 89 million active users to 100 million during the first half of 2016, but the question is if it will be fast enough.

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