Spotify Could Be A $100 Billion Company

Spotify, the popular streaming music platform, could be worth $20 billion during a future initial public offering, CNBC said in a report citing GP Bullhound. Investors will likely want to jump in on the IPO as the company would be worth as much as $55 billion by 2020 — only to rise to $100 billion after that.

The uber-bullish case for Spotify's valuation is based on the streaming music platform's subscriber growth profile, GP Bullhound said. The company most recently announced in July it has 60 million users who pay a monthly fee to access the platform. This figure could rise to 100 million by the middle of next year, which marks an acceleration from prior estimates.

By 2020, Spotify could boast 200 million paying subscribers and another 300 million users who access the platform through an ad-supported but free account. Perhaps more important, the ad-supported side of the business will see a higher revenue per user than previously thought.

However, Spotify's ongoing operating losses will likely continue for some time and is distracting investors from the "true value that is being created."

"Given that Spotify's growth continues and that emerging market growth keeps average revenue per premium subscriber relatively in shape we envision that Spotify has a long term potential of being valued at $100 billion," GP Bullhound said in its report.

Finally, Spotify doesn't have to worry about the competitive threat from Apple Inc. AAPL and other streaming music providers, as it boasts a superior user base and easier to use app.

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Can Spotify Take On Apple? It Will At Least Try __________ Image Credit: By Philafrenzy (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons