Spotify Officially Files for IPO With 71 Million Premium Subscribers and 159 Million Monthly Active Users

[MacRumors]

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.

Article Link: Spotify Officially Files for IPO With 71 Million Premium Subscribers and 159 Million Monthly Active Users

 

[Red Oak]

Losses have increased as premium subscribers have increased

I can't wait to short the hell out of this

 

[asdavis10]

And now the fun begins. Profit and loss will have real impact now. But they are going to get a huge cash injection. Spend wisely.

 

[DTphonehome]

More like IP-oh no, we’re hemorrhaging cash!

 

[firewire9000]

After ten years with Spotify premium I switched to Apple Music and I couldn’t be more happier. Asking to Siri for songs or playlists is superb. I was reluctant at first because I like the Spotify app but finally was because I’m used to not because it’s a better interface per se. I like the Apple Music’s interface and the curated playlists. I used SongShift to migrate all of my playlists yo AM and it worked flawlessly.

 

[RudySnow]

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.

A company that takes in $XXX but still manages to lose $YYY overall is not a profitable company. Who the hell would invest in that?!?

FYI MacRumors—can you post how much they lost in 2015 and 2016 as well.

 

[agsystems]

"but posted a loss of $1.5 billion in 2017" - don't get it - the losses will continue to mount as the licensing costs continue to soar - this is the textbook definition of a money losing business.

 

[WhoDaKat]

Here is a pump and dump stock. Who can like their long term financial prospects other than the 20 year old android user that doesn't pay for the service. With AM you have an established base of paying customers who are not likely or at least less likely to leave. Spotify is just like SnapChat. They are one bad update away from the garbage can. I would never put a penny of my investment money into this. And you won't see Warren Buffet getting on the Spotify stock bandwagon either.

 

[CarpalMac]

More like IP-oh no, we’re hemorrhaging cash!

"Profits? Who the hell wants those?!" - Snap Inc.

 

[firewire9000]

"but posted a loss of $1.5 billion in 2017" - don't get it - the losses will continue to mount as the licensing costs continue to soar - this is the textbook definition of a money losing business.

I’m wondering if they ever managed to have profits since the beginning.

 

[jonblatho]

A company that takes in $XXX but still manages to lose $YYY overall is not a profitable company. Who the hell would invest in that?!?

FYI MacRumors—can you post how much they lost in 2015 and 2016 as well.

I loathe Spotify, but it’s common for new companies (even at Spotify’s age given its scale) to hemorrhage cash. This is…kind of a really extreme case, though.

 

[thisisnotmyname]

A company that takes in $XXX but still manages to lose $YYY overall is not a profitable company. Who the hell would invest in that?!?

FYI MacRumors—can you post how much they lost in 2015 and 2016 as well.

There is a fairly long line of high market cap companies in just that situation. pretty typical to have an extended burn period these days.

 

[Coconut Bean]

A company that takes in $XXX but still manages to lose $YYY overall is not a profitable company. Who the hell would invest in that?!?

FYI MacRumors—can you post how much they lost in 2015 and 2016 as well.

Ever heard about the conjugate triangle of success?

Joke aside, growth is important for these kind of companies. I mean Twitter never made a profit before last quarter.

 

[zorinlynx]

Now the company will be beholden to shareholders.

I don't expect this to be a good thing.

 

[Michael Scrip]

"but posted a loss of $1.5 billion in 2017" - don't get it - the losses will continue to mount as the licensing costs continue to soar - this is the textbook definition of a money losing business.

Exactly.

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!

 

[ArtOfWarfare]

Searched on Robinhood. No results for SPOT. How do I buy it?

 

[QCassidy352]

I just finished the 3 months for $.99 promo and canceled at the end. I find the interface very cluttered and the recommendations worse than Pandora. It’s a “fine” service but I don’t really get the huge following it has as compared to Apple Music or pandora premium.

 

[oneMadRssn]

I just finished the 3 months for $.99 promo and canceled at the end. I find the interface very cluttered and the recommendations worse than Pandora. It’s a “fine” service but I don’t really get the huge following it has as compared to Apple Music or pandora premium.

I'm a Spotify Premium subscriber, but I agree. I would describe Spotify as least bad of the big streaming services, which isn't saying much since they all have something pretty bad about them.

 

[Return Zero]

Searched on Robinhood. No results for SPOT. How do I buy it?

They have not yet given a timeframe for listing shares. If you're using Robinhood, I wouldn't count on being ahead of the curve anyway.

 

[applesith]

Spotify needs to introduce a new product or something that makes their product more differentiated. They are already running at a loss and at the mercy of music royalties, which has tiny margins.

Apple, Google, or Amazon could easily drop the price of their music plans and offset any incurred losses with one of their many other products/services. Spotify would very likely have to lower their rate to match that; further shrinking their margins.

I really do not see how they are a good candidate for an IPO with their current offering.

 

[tito2020]

Losses have increased as premium subscribers have increased

I can't wait to short the hell out of this

we make them rich that is why i use a flip phone

 

[tentales]

I loathe Spotify, but it’s common for new companies (even at Spotify’s age given its scale) to hemorrhage cash. This is…kind of a really extreme case, though.

Extreme? What makes it so ?

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.

 

[Bawstun]

After ten years with Spotify premium I switched to Apple Music and I couldn’t be more happier. Asking to Siri for songs or playlists it’s superb. I was reluctant at first because I like the Spotify app but finally was because I’m used to not because it’s a better interface per se. I like the Apple Music’s interface and the curated playlists. I used SongShift to migrate all of my playlists yo AM and it worked flawlessly.

This has to be a joke. Or you’re some kind of Apple employee. Spotify is many times better than AM.
[doublepost=1519854298][/doublepost]

A company that takes in $XXX but still manages to lose $YYY overall is not a profitable company. Who the hell would invest in that?!?

FYI MacRumors—can you post how much they lost in 2015 and 2016 as well.

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]

I just finished the 3 months for $.99 promo and canceled at the end. I find the interface very cluttered and the recommendations worse than Pandora. It’s a “fine” service but I don’t really get the huge following it has as compared to Apple Music or pandora premium.

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.

 

[Red Oak]

Searched on Robinhood. No results for SPOT. How do I buy it?

If you truly have ~ $6K in total investments, based on your posts, you should just invest in index funds. Stay away from individual stocks

Also, based on your profile, you have been on MacRumors since 2007 and posted several thousands of times. Yet, you only own 1 share of Apple stock. Is that true?

 

[Brenster]

Personally I wish Spotify well, I used to be a premium subscriber. Not sure how they might convert more of their free subscribers to paying customers. There is I believe an argument that if the labels campaign too strongly against their free tier then the current free tier users might well return to mass torrenting/piracy. Likewise if labels wind up demanding more and more from the biggest streaming provider. And now shareholders are going to start to want returns on their investments.

I’m a satisfied Apple Music family membership subscriber here but I do wish Spotify well. Great service once you start paying and get offline sync and no adverts.