The investment bank GP Bullhound has announced that Spotify might go public at a $20 Billion valuation, a figure that is expected to multiply by at least five times right after 2020. GP Bullhound has been an invaluable figure in the growth of Spotify, being one of the company’s advisers in matters pertaining to fundraising.
In its report, the investment bank has maintained an air of positivity towards the Stockholm based company, citing that the recent upsurge of registered users is the main reason behind it’s fast growth. Premium subscribers, in particular, have remained to be the major focus of the Music streaming engine, although this decision is slowly becoming debatable, (now that the company is going public.)
Earlier on Spotify had announced that it had hit the 60 Million paying subscribers mark in July and the figure has been projected (by GP Bullhound) to cross the 100 Million mark by 2018. In addition, GP Bullhound predicted that by 2020 this music company will have at least 500 Million subscribers, with 200 Million being premium users. If this goes well, they will see a revenue growth of up to $55 billion in 2020.
All the same, the move to lower user revenue for premium users might see a decline in revenue generation for the company. But the move is arguably wise, for a company that’s going public with its stocks. Of late Spotify has been lowering the charges for its premium users through discounts and custom plans, all in a bid to attract people to move from free subscription to paid plans. In 2016, the average user generated at least $89 for this outfit, but this has fallen to $80, with an increase in paid users registration.
The climb to the $100 billionth mark won’t be easy as they are now competing with Apple and Amazon for the total market share.
Nonetheless, Spotify is still in the lead. There is, however, a loop in their business model as it has been very reluctant to incorporate voice dominated inputs.
If the market moves in this direction, then Apple’s Siri and Amazon’s Alexa could put their music streaming services well into competition with Spotify.
But as of now, they are way ahead of anything else that can stream music online.