Testing the shares buy billions is a great move in investment. These investors have huge resources (such as researcher teams) that can specify high values and then install them before learning the rest of the market about them.
However, the supplies chased by Coleman and his team in Tiger Global Management have recently been built very well known, since since the beginning of 2023 they have increased by stunning 645%. Spotics (Nyse: Spot)a service that many have probably heard or used for. In the fourth quarter of Coleman and Tiger Global, they enhanced the shares with only 2,560 shares to 1.26 million shares, worth about $ 560 million.
Does Coleman know something that other investors don’t? Or is this big time winner of more space to run?
Spotify’s Sound Streaming Service is the main option in space. His huge library of music and podcast has taken over the streaming market, and Spotify is a total of 675 million active users a month. This figure increased by 12% compared to the year, so that there is still a lot of growth, at least on the overall foreign user.
However, out of those 675 million, only 263 million pays to the premium subscription, so there is a lot of space to convert some ads users into premium users. This is a very lucrative market for Spotify, because it is only 39% of the subscriber of the premium user, but this group generates 87% of Spotify revenue.
This is a huge piece of potential income if Spotify can continue to pretend their subscribers who support the advertisement into premium subscribers. However, investors must be realistic here, because there will never be a time when 100% of Spotify users move on to the premium model unless the administration decides to tat the layer that supports the ad.
Coleman and his Tiger Global Management team recognize this and see the path of continuous revenue growth. Analysts on Wall Street are also lush on Spotify’s growth, as they expect 16% of revenue growth in 2025 and 15% in 2026. It is a market growth, so this section looks like a potential winner, at least on the side of revenue.
But how are his profits?
2024 was a transitional year for Spotify, as it became firmly profitable.
Operational margin of Spotify It stabilized around that 11% of the mark, which is very strong, given that Spotify’s gross margin floats about 30% of the range. Compared to many software companies, Spotify’s margins are not nearly as high because it has to pay a significant amount of their income for the right to streaming of music and podcast. This is important to remember, because Spotify will probably never publish huge margins of 30%. However, many fantastic investments did not have big profit margins, so that does not mean that Spotify cannot be a successful investment.
