Looking Closely at the Growth Curve for Spotify Technology SA (SPOT)

According to last week’s second-quarter results, advertising income at music provider Spotify Technology SA (NYSE: SPOT) is fast expanding and will likely be a primary driver of growth in the long run.

In general, Spotify Technology’s second-quarter performance might be described as uneven. On the one hand, the company’s revenue is expanding at a double-digit rate, but it is also increasing its loss.

However, investors were pleased with the information provided by Spotify Technology SA (SPOT), as its stock increased more than 4% in the week following the report’s release and more than 20% in the last month.

Spotify’s growth in the last quarter was driven by two factors: an increase in subscription numbers and growth in ad-supported segments. According to the most recent figures, the music streaming service has over 433 million monthly active users, with 188 million of them being paid customers.

Furthermore, Spotify Technology SA (SPOT) reported outstanding results from its advertising division, which includes both music streaming and podcasts. Ad income is expected to expand rapidly in the next years due to the international popularity of podcasts, as well as the company’s own investments in ad technology and content.

Management hopes to attain an operating margin of more than 10% in the long run. Based on current revenue, the corporation must generate $1.12 billion in operating income. Remember that the management previously proclaimed its intention to link at least 1 billion listeners by 2030.

By this time, annual income might reach about $100 billion. The extension of geographical will result in an increase in the client base, as planned. The firm now works in 183 countries, although its presence in some of them remains modest and plainly does not match Spotify Technology’s ambitions and capabilities.

Spotify Technology S.A. (NYSE: SPOT) shares have risen 11.57 percent in the previous week but 6.56 percent in the last quarter. Going back further, the stock’s price has been down -40.89 percent in the previous six months but is down -50.43 percent year to date.