Seeking Alpha

Report: Spotify looking for funding at SEK35B ($5.27B) valuation

If the report, which comes from Swedish paper Dagens Industri (translation), is accurate, it means Spotify is shooting for a valuation 76% higher than the $3B valuation it reportedly received in a ~$100M funding round last November. It also means the music subscription/Web radio service would be worth considerably more than Pandora (P - $3.44B market cap).

Spotify posted revenue of $577M (up over 2x Y/Y) in 2012, but also a net loss of $77.9M (+29% Y/Y), as massive content licensing costs (~70% of revenue) pressure its margins (Pandora can definitely sympathize). Thus, Spotify is reportedly looking to be valued at 9.1x 2012 sales. Pandora, whose own valuation has shot higher since November, currently trades at 8.1x FY13 (ended Jan. '13) sales.

Though many other firms rolled out subscription music services before it to limited success, Spotify appears to have cracked the code with the help of an intuitive UI, good music discovery tools, P2P tech that improves performance, and a cheap ($5/month) PC-only subscription option (PC/mobile subscriptions go for $10/month).

Spotify has 6M paid subs to go with tens of millions of free (ad-supported) users. Pandora has 2.5M+ paid subs and 72M+ total active users.

From other sites
Comments (3)
  • Mike Arnold
    , contributor
    Comments (2190) | Send Message
    love the service. i'm a paid subscriber. never going back to buying content.
    7 Sep 2013, 04:46 PM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (7979) | Send Message
    Guess who owns $3.7M worth of stock as of 6/30/13. Could be another major favor in the cap of $GSVC.
    7 Sep 2013, 05:47 PM Reply Like
  • TheLittleGoat
    , contributor
    Comments (105) | Send Message
    Spotify seems to be winning EU and Pandora US. Spotify seems to be going for a more subscription funded model while Pandora going for a more radio/ad funded model with subscription not as prominent.
    8 Sep 2013, 07:36 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs