After a decade of chasing growth at the expense of profits, Spotify may have turned the corner in the third quarter of 2019
In the third quarter 2019, the music streaming giant turned a $60 million operating profit on $1.92 billion of revenue, and has eked out a $4.4 million operating profit over the first nine months of the year. Investors were impressed by financial gains, subscribers growing to 113 million and monthly active users reaching 248 million. Spotify's share price jumped 19% on Oct.
Can Spotify maintain the momentum? Sustained profits would have major implications throughout the music industry. Spotify would have proven the business model of a scalable, global music streaming company. For a change, a streaming service wouldn't be buried in digital music's graveyard along with barely-known startups and admirable attempts by the likes of Samsung, Microsoft and Nokia.
When it comes to Spotify, Wall Street has more bulls than bears. Of the 22 analysts covering Spotify, 13 have "buy" ratings and only two have "sell" ratings, according to MarketBeat. After earnings were released Oct. 28, two analysts raised their price targets . In a report titled "Don't Call it a Comeback," Morgan Stanley analysts wrote that Spotify's potential to become the market leader "are not even close to being priced in.
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