Spotify‘s market worth surged to a report $124 billion on Tuesday (February 4) after its inventory reached an all-time excessive, fueled by its first-ever full yr of working revenue.
Shares of the Swedish audio-streaming large jumped 13% in New York buying and selling Tuesday, crossing the $600 threshold for the primary time, and shutting at $621.77.
The inventory has skyrocketed 178.5% from a yr in the past, outperforming the broader tech sector.
The milestone comes as Spotify reported working revenue for FY 2024 of €1.4 billion ($1.49bn), marking a turnaround from a lack of €466 million ($497m) in 2023.
On the time of writing, Common Music Group, the world’s largest music rights firm, which trades on the Amsterdam Euronext, has a market cap worth of $49.39 billion.
Warner Music Group, additionally publicly traded, and listed on the NASDAQ, has a market cap worth of $16.81 billion.
Whereas the third main, Sony Music, isn’t publicly traded (though its mum or dad, Sony Group, is on the Tokyo Inventory Trade ), it’s truthful to imagine that Spotify’s market cap worth is at present value greater than that of all three main music firms mixed.
Chatting with analysts throughout an earnings name on Tuesday, Spotify CEO Daniel Ek mentioned Spotify wasn’t centered on profitability within the first 16 years of enterprise.
“All we had been centered on was driving significant scale. We didn’t fear about profitability. And in order that’s why you heard me say we’ve got an excellent product, however not essentially an excellent enterprise…. I feel we’re now proving that we’re an excellent enterprise, too.”
Ek attributed Spotify’s profitability to value reductions and a yr of monetization. “And far of that basically comes from that added scale that we’re now working at. Like most platform companies, extra scale begets extra profitability,” Ek mentioned.
The swing to profitability got here as SPOT’s income jumped 18% YoY in 2024 to €15.7 billion ($16.7bn), owing to elevated turnover from its Premium subscribers.
The corporate ended 2024 with 263 million paying customers, up 4%, or 11 million web subscribers, from 252 million on the finish of Q3 (ending September 30, 2024).
In This fall, Spotify’s whole world Month-to-month Lively Customers (MAUs) grew 12% YoY to 675 million and by 5% in comparison with the earlier quarter (Q3 2024), when the platform counted 640 million MAUs.
As MBW beforehand famous, Spotify’s enlargement was partially aided by market modifications, together with the closure of competitor TikTok Music in a number of key markets. TikTok’s streaming service shut down operations in Indonesia, Brazil, Australia, Singapore, and Mexico in late November 2024.
Spotify additionally attributed its robust efficiency in 2024 to “shifts in competitor dynamics in choose creating markets.”
The corporate’s market worth is poised to succeed in new heights as analysts are more and more optimistic about Spotify’s trajectory. Amongst 40 analysts tracked by FactSet, the consensus ranking is “obese,” with a $574.32 worth goal.
Analysts from KeyBanc Capital Markets on Friday (January 31) up to date their outlook for Spotify to $600 from $555, as they predicted robust earnings. Forward of the discharge of the This fall and FY2024 outcomes, Citigroup additionally lifted its inventory worth goal for Spotify to $540 from $500.
Wanting forward, Ek expressed optimism about Spotify’s future trajectory. “I’m very enthusiastic about 2025 and really feel actually good about the place we’re as each a product and as a enterprise,” Ek said.
Waiting for Q1 2025, Spotify CFO Christian Luiga mentioned Q1 is “a seasonally smallest quarter by way of MAU and subscriber consumption in addition to advert gross sales.” The corporate nonetheless expects its MAUs to develop by round 3 million from This fall 2024 to 678 million. Analysts anticipate MAUs in Q1 to succeed in 678.65 million, in response to information compiled by FactSet.
Spotify forecasts an working revenue of €548 million for Q1, effectively above analysts’ €439 million estimate, whereas whole income is anticipated to succeed in €4.2 billion.
“Spotify’s execution continues to enhance and the corporate enters 2025 with accelerating month-to-month lively consumer development, product enhancements in audiobooks & video podcasts, and talent to proceed to drive increased gross margins and working margins.”
Doug Anmuth, JPMorgan
Luiga advised analysts: “With respect to the MAU web additions, we had an exceptionally robust quarter 4 with outperformance pushed by creating markets, and we’re not prioritizing retention of the latest inflow of decrease engagement customers in quarter one as we proceed to give attention to rising higher-value customers.”
In the meantime, JPMorgan analyst Doug Anmuth mentioned in a latest notice: “Spotify’s execution continues to enhance and the corporate enters 2025 with accelerating month-to-month lively consumer development, product enhancements in audiobooks & video podcasts, and talent to proceed to drive increased gross margins and working margins.”
Final week, Spotify mentioned it paid out a report $10 billion to the music business in 2024, with whole funds since its founding reaching almost $60 billion.
“We estimate that, in 2014, round 10,000 artists generated at the very least $10,000 per yr on Spotify. At the moment, effectively over 10,000 artists generate over $100,000 per yr from Spotify alone. That’s an attractive factor,” mentioned David Kaefer, VP, Music Enterprise, Spotify.
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