![]() However, its ARPU for premium subscribers is on the decline, partly due to the introduction of discounts for students and families, and the metric could decline further as the company expands into emerging markets such as India, where ARPUs for digital services are much lower. Last year, the company saw its paying subscriber base jump by close to 50%. These subscribers are not only much more lucrative in terms of revenues, but also from a margin perspective. Spotify has steadily been increasing its mix of paying users, with about 44% of users in 2017 paying for the service, up from 31% in 2015. Premium Segment Will See Strong Subscriber Growth ![]() We have also created an interactive dashboard analysis which you can use to arrive at your own valuation estimates for Spotify. In this note, we break down the company’s valuation, based on the expected performance of two business segments (ad-supported and premium). This compares to a $132 per share reference price, implying a valuation of about $23.5 billion, though the stock traded up substantially in early trading. We estimate that the company is worth about $200 per share, or roughly $36 billion, which translates into about 5.5x projected 2018 sales. Spotify has become the de facto smartphone music service of sorts, with a paying user base that is roughly twice as large as Apple Music, the second largest player. Streaming music company Spotify has gone public, in what is likely to be one of the most closely watched IPOs of the year.
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