Friday, September 16, 2016

One Of Spotify's Owners Says It's NOT Unlikely That Facebook Buys The Company

Via Business Insider:

A few days ago Spotify reached a huge milestone as Daniel Ek, CEO and founder, revealed that the company now had over 40 million paying users.

Today the renowned Swedish investment company GP Bullhound, which has a stake in Spotify through one of if its funds, updated its view on the company. And the expectations are high, to say the least.

”We think a US IPO in 2017 is likely but also don´t discard the possibility of a sale to Facebook. Historically, building social networks around its offer has been a week spot for Spotify. In that sense a deal with Facebook would be something positive. It would also make Spotify stronger against Apple, as Apple today doesn't have a social network connected to its offer”, says Joakim Dal, analyst at GP Bullhound to Breakit.

He adds: ”Daniel Ek and Mark Zuckerberg know each other well and if Facebook would choose to move into a new area music is very likely”.

A clear evidence of the true friendship between Ek and Zuckerberg was the fact that the Facebook founder was one of the many prominent guests at Daniel Ek's wedding a few weeks ago.

GP Bullhound also revealed a drastically changed scenario overview for the Swedish streaming company.

The analysts update the base case scenario from 50 million paying users in 2017 to more than 100 million users before 2020.

At 2020 the base case valution for Spotify will be $20 billion, according to GP Bullhound.

In the best case scenario Spotify manage to increase its margins and reaches a market value of $53 billion in 2020.

”Growing the video content business and implementing best-of-class social features is key to reaching our best case scenario”, the report says.

At a 2017 IPO, Spotify is expected to have more than 50 million paying users, more than 100 million non-paying users and $5 billion in annualized revenue, according to GP Bullhound.

”Our target 2017 IPO valuation range for Spotify is between 15 to 20 billion dollars", Dal says.

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