Spotify Stock Drops As Promotions Hurt Average Revenue Per User


More earning story before he gets the stocks on our radar and that's Spotify. Which surprised Wall Street by reporting a profit in the third quarter? The stock was still down this week though run. Yeah. Because they don't really make money. The only reason they were profitable because of their investment in tencent music entertainment groups that they got to kind of goose up the value of that which led to a paper profit, but they're not profitable because of what they actually do. In fact, they reported net losses every year since they launched in two thousand eight so you know, what what do you do with that? At some point. They've got to make money listeners will recall they went public back in April at in in a new way. Really they went kind of a direct listing approach rather than using underwriters which people thought maybe this is kind of the the new wave of going public. I don't think necessarily we've seen that yet. But this was a way for investors in the company to get liquidity. And as a result now, it's a public company, but you know, they they've got good subscriber growth, but they did have to kind of pare back on guidance with respect to that they pared back on guidance with respect to gross margins. They just can't seem to flow money to the bottom line. They have nearly two. Hundred million monthly every active users. What is wrong with this business that they can't make money because they have a pretty compelling free offering action. Spotify, but I'd never pay for inciting with Spotify. You know? We learn some lessons going into that. IPO in snap is another good example of of learning some lessons going into that IPO paid attention to Facebook and Twitter. And I think we learned a lot from that kind of get an idea of what might happen with snap and with Spotify. We could look back to Pandora at least get some idea as to the economics of that business. And in what they would have to do to make any really meaningful money over the long haul in the economics of the music business or just really bad in. So I mean, they could probably have user base of three hundred million, but I'm not necessarily sure that makes for such an attractive investment. And it just goes to show that there are cases where it can be a great product or service for consumers that doesn't necessarily translate. It's Wayne to good investment for investors.

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