The Formula Hiding in Plain Sight
Why Spotify keeps winning while investors look the wrong way.
Spotify (SPOT) does not fly under the radar.
At the end of the first quarter, Spotify had 761 million monthly active users (MAUs), implying that approximately one of every 11 humans on the planet engaged with the platform on average each month during the quarter.
41 sell-side analysts cover it full time.
And yet, I don’t think most investors understand why Spotify is able to consistently keep deep-pocketed competitors like Google (YouTube Music), Apple (Apple Music), and Amazon (Amazon Music) at bay - especially when this group uses music as a loss-leader.
At the recent investor day, management even laid bare the formula for success, but investors remain focused on only one side of the equation.
Todd Wenning is the founder of KNA Capital Management, LLC, an Ohio-registered investment advisor that manages a concentrated equity strategy and provides other investment-related services.
At the time of publication, Todd, his immediate family, and/or KNA Capital Management, LLC or its clients own shares of Spotify, Apple, and Amazon.
Please see important disclaimers.