SPOT - Citi sees Spotify breaking through on margin growth goals

Citi is buying Spotify's (NYSE:SPOT) story on how it will boost gross margins ahead, which is bullish for the audio streamer's equity value, it says. Investments in growing Spotify's music and podcast businesses haven't helped or hurt gross margins to date, analyst Jason Bazinet wrote. But the company should see bigger tailwinds from its Marketplace effort, and fewer headwinds in podcasting ahead. Spotify's gross margins have been well below a long-term target of 40%, he noted - settling between 25.5% to 26.8% over the past four years - a fact Bazinet attributes to music content owners holding the upper hand in the eternal battle between content owners and distributors. That helps to explain why Spotify has looked to broaden its audio platform beyond music, into podcasts and likely audiobooks, and possibly even verticals like live sports one day, he said. The gross margins have been used by the Street as

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Citi sees Spotify breaking through on margin growth goals