Spotify’s choice to put from 17% of the workforce is the main know-how story of the morning, and I would not blame you when you had been slightly confused why it does this. In any case, the music streaming firm simply reported constructive working earnings and nine-figure free money circulation within the third quarter.
The brief reply is: enterprise and market fundamentals.
Spotify has grown into a really large firm. Within the third quarter, income rose 11% to $3.36 billion from a 12 months in the past, for a run fee of roughly $13.4 billion. That is so much.
However whereas the corporate is raking in gross sales and earnings (final 12 months it reported an working loss and far smaller free money circulation), it is not getting the sort of respect from traders it as soon as loved. It is seemingly that Spotify desires to earn that respect once more.
Here is a chart displaying Spotify’s price-to-sales ratio, a monitoring metric that is the mature model of the a number of income customary we frequently use for startups:
