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yesterday’s price is not today’s price

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Happy New Year! I hope you enjoyed the holidays. I spent mine taking my kids to museums and catching up on all the movies. Anora was great. I thought it would have done much better at last night’s Golden Globes but it’s a long, long awards season.

We’re kicking off the year with an episode on Spotify, which had a strong 2024 despite the challenging year that the major record labels had. I wrote about this in August, but it deserved a true deep dive on the show (which now has new intro music!) To break it all down, I was joined by an investor who holds positions in both Spotify and Universal Music Group. He publicly goes by the name of Sleepwell Capital on X.

You can listen to the episode here or read below for a few takeaways.

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Spotify’s road to $100B and profitability

A lot can change in two years! Here’s what I wrote in a Trapital memo in November 2022:

Today, Spotify’s market cap is over $93 billion, nearly seven times higher than when I posed my acquisition question above. Spotify’s market cap briefly surpassed $100 billion in November 2024. Somewhere out there, there’s a day trader who brags to his friends about how they “bought the dip” on Spotify and never doubted CEO Daniel Ek for one minute. That same-day trader might have also sold all their Bitcoin in 2016, but you already know that they only brag about the wins!

To be fair, some of Spotify’s growth was similar to many publicly traded tech companies that experienced:

• sky-high growth during COVID-19 lockdowns (overinflated in hindsight)
• growth decline once lockdowns ended and interest rates rose (an overcorrection in hindsight)
• cost-reducing layoffs which, while tough for those who lost jobs, were a result of over-hiring during low interest-rate times
• a healthy 2024 for many stocks (Nasdaq was up 29.6% in 2024!)

But that only accounts for a portion of the growth, at best. The rest of the growth comes from more Spotify and industry-specific factors, which was the focus of our episode.

We talked about all of Spotify’s moves: the brilliant ones, the controversial ones, what they mean for Spotify’s various business partners, and how they impact artists, podcasters, and creators whose work makes the platform possible. This is about how the company could be worth more than all three major record labels combined despite the industry dynamics that have limited other deep-pocketed competitors to gain similar traction.

Music is one of the most challenging industries to build a giant company in. The billion-dollar exits are few and far between, and it’s not for a lack of trying. It’s harder to build a $100 billion company in music than it is to build a $500 billion company in other industries. Regardless of where you stand on Spotify, this is the episode for you.

Listen here:
​Spotify | Apple Podcasts | Overcast​

CHARTMETRIC STAT OF THE WEEK

The most-streamed song on Spotify in 2024 was Billie Eilish​’s “Birds of a Feather” with 1,775,172,881 listens surpassing Sabrina Carpenter’s “Espresso” which had 1,774,525,704 listens. Eilish’s song came out in May, one month after “Espresso” and a few months after the 2024 albums from Taylor Swift, Beyonce, Ariana Grande, and others. We’ll have to revisit these 2024 songs in a few years and see if the same songs top the list!

How would you rate this episode?

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By the way, if you didn’t get a chance to listen over the holidays, here are our winners and losers of 2024, part 1 and part 2. Enjoy!

Dan Runcie
Founder of Trapital

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