SPOT
Spotify
Platform / Network
★ Quality 42/100Price today
$542.43
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What this business is made of
The business
The planet's jukebox, billed month by month straight from your pocket.
Spotify streams music and podcasts to over 675 million users; charges a monthly subscription to paying ones and sells ads to the free ones. Booked $17.2B in 2025. Now adding audiobooks to sell something that doesn't hand almost all the money to the record labels.
Its playlists and personalized algorithm create switching laziness: your library lives there. But it's not a deep moat: it doesn't own the content, it rents it. Record labels take about 70% of every dollar, and that squeezes the margin to 32%.
Revenue history
From $11.4B to $17.2B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $17.8B · FY2025
Of every $100 in sales, $87 goes to costs and operations; $13 is left as net profit (13% margin).
Catalysts and risks
Audiobooks and podcasts: owned content that expands margin without paying the 70% royalties.
Price hikes in 2025 with low subscriber churn.
Q4 earnings per share beat expectations by 62%.
Record labels set the royalty floor (~70% of revenue): they hold the leash.
Apple Music, Amazon Music and YouTube Music fight for the same ear with deeper pockets.
32% gross margin: high-volume, low-fat business.
Charlie's note
“Paying 25x for a business that hands 70% to the labels demands faith that audiobooks widen the margin. The 18% growth is real; the moat is borrowed. Quality isn't bad, but the price already prices in a good chunk of the optimism.”
Analysis · July 2026
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