Will Spotify's "Investment Year" Pay Off?
On Feb. 5, Spotify (NYSE: SPOT) reported fourth-quarter results that showed its monthly active users (MAUs) grew 31% year over year to 271 million. This marked the third straight quarter of accelerating MAU growth, and company founder and CEO Daniel Ek attributed this success to the work the company did in 2018 around product enhancements, innovation, and the free ad-supported service. Management saw strong leading indicators that these investments would work, but it took until last year for them to really pay dividends.
This year, the company is ramping up investments in several areas, so much so that Ek referred to 2020 as "an investment year." So what are these big investments, and when should they pay off?
One of Spotify's biggest investments this year will be original podcast content. This is a major area of focus for the company, because this content is owned by Spotify and can be monetized through advertising. More importantly, creating one podcast episode is a fixed cost, but the content can be listened to by a theoretically unlimited audience and sell many ad spots in the process.
Source Fool.com
