STORY: Spotify said on Wednesday it expects to reach $100 billion in revenue annually in the next 10 years – an ambitious goal announced during its first investor day since going public in 2018.
The audio streaming company also promised high-margin returns from its costly expansion into podcasts and audiobooks, all in the hopes of stoking Wall Street’s enthusiasm despite the slowing global economy.
To make it happen, Spotify would need to make its revenue grow nearly 10-fold from its 2021 figures.
Shares of the company rose 6.5% on Wednesday after losing 53% of its market value so far in 2022, worse than the 24% drop in the S&P 500 communication services sector index, which includes Spotify and other media companies.
However, CEO Daniel Ek told investors that the company is performing “better than you probably expect” with gross margins of 28.5%, well on its way to reaching the company’s 30-35% long-term goal.
One of the reasons for not reaching its long-term goals was its aggressive spending – more than $1 billion – to build up its podcast and audiobooks platforms.
Ek expects the podcast and audiobooks businesses have the potential to generate margins over 40%, though he did not specify how long it would take to hit that target.
While it has so far been a rough year for streaming companies like Spotify and Netflix, the Swedish company recently faced controversy over hosting the popular podcast The Joe Rogan Experience, though the service continued to add users and paying subscribers in the first quarter.