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Highlights:
- Spotify (NYSE:SPOT) targets annual revenue of US$100 billion in the next 10 years.
- Spotify’s revenue in 2021 was US$11.4 billion.
- Spotify has a market of US$22.44 billion.
Audio streaming company Spotify Inc (NYSE:SPOT) on Wednesday revealed its goal to reach US$100 billion in annual revenue in the next 10 years. The firm also assured higher returns from its costly expansion into podcasts and audiobooks.
After going public in 2018, the company hosted its first investor day on Wednesday with the hope of cashing in on Wall Street’s enthusiasm.
Spotify’s revenue in 2021 was US$11.4 billion, which needs to grow 10 times in the next 10 years to reach the ambitious target.
The company’s chief executive, Daniel Ek, projected the gross margins to jump 40% and operating margin by 20% during the period.
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Also Read: Why Spotify Technology (NYSE:SPOT) stock slumped after strong earnings?
Spotify shed 53% of its market value in 2022
The company lost 53% of its market value this year. However, its shares gained 5% on Wednesday. The S&P 500’s communication services index shed 24% in 2022, including Spotify and other social network companies.
However, the CEO has a positive outlook on Spotify’s growth in the coming years.
"We are performing much better than you probably suspect, roughly 28.5% (margins), which is a significant progress in reaching our 30% to 35% long-term goal," Daniel Ek told investors during the meet.
The company said that it has allocated more than US$1 billion to podcasting and expects revenue to grow materially this year. It earned US$215 million in revenue from its podcast division last year.
According to Ek, the podcast business can generate 40% to 50% margins, while the audio business could generate 40% margins. However, he did not clarify the time frame to reach those targets.
Bottom line:
Spotify has a market cap of US$22.44 billion. It has a forward P/E for one year of -185.47, and its earnings per share (EPS) is US$-0.71. Its 52-week highest and lowest stock prices were US$305.60 and US$89.03, respectively. Its trading volume was 2,408,335 on June 7.
