SPOT - Spotify: Unconvincing Business Model
2024-05-22 07:25:29 ET
Summary
- Although the idea was appealing, the business model was not designed to be sustainable from the onset.
- This leads me to still doubt the management's ability to turn it around in the long term, despite modest progress.
- Spotify faces Amazon, Apple, YouTube & Co. without yet having a USP.
- In the short term, momentum is on the side of Spotify amid increasing profitability.
- My long-term sell rating only applies to those who share my diagnosis about the business model.
Spotify Never Passed The First Checkpoint
Spotify (SPOT), despite being a market leader, first mover, and top-line fast grower, still fails to convince me with the most fundamental aspect: the business model. With this article, I aim to dissect this through a simple Porter's Five Forces analysis. Spotify is currently being celebrated because it is making small profits for the first time ever in its entire history. Nevertheless, current monetization and profitability efforts appear far too vague to be convincing in the medium to long term. Spotify has proven to be an industry game changer, yet it has failed from the outset to set it on solid footing and thus is not attractive to investors seeking reliable returns with adequate predictability and acceptable risk....
Spotify: Unconvincing Business Model