Lots of people asked me my views on the below thread on $SPOT

This is a complex story with lots of moving parts, so naturally widely different opinions out there.

It’s super-important to understand and think through the opposing view of your stocks, so here’s where I stand👇 🧵
One point before I start, I’m definitely not picking on @CobraGlobal here, in fact the reason why I’m taking the time to respond with my views is exactly because it’s a well thought and laid out thread. I can tell he’s thought this through and taken his time.
LT gross margin targets are 30-40% I think they get close high end with likelihood of surpassing. Don’t need better label terms, but creating new monetization means on top of existing revenue base w/ 1)price increases 2) podcasts (ads, subs), 3)sharing label expenses4)others
I think “around long enough” is relative, esp if you have 5-10X the opportunity ahead of you, you’re still very much in growth and investing mode (R&D, S&M etc.) This is all still playing out and the steady-state or end-game will be clear a decade from now, not today.
Yes, but ease of use, data, convenience/ubiquity, and personalization are differentiators. If it were really a commodity, begs the question of why SPOT is still by far the biggest player, showing no signs of growth slowdown and a superior product evidenced by higher engagement
Again, still early stages. 3rd inning IMO, some people may have had that view, but FCF will come much later, prob 5+ years. This is similar to AMZN and NFLX earlier days, both took long to play out and were widely controversial with their strategy
Wont get bought out now, Ek and Lorentzon wont sell (they control), they’re well on their way to achieving their mission since day one: helping creators live off their art and consumers enjoy it. Value creation will come with time as things play out, this is not <3 yr investment.
Music is viable: two-sided mkt place makes a lot of sense, increasing prices does too. Can also find new ways to bring label expenses to the platform. Monetizing other things like live, tipping, merch, concerts, data… Indie market (1/4) is up for grabs, they can go after it
wrt podcasts, jury is out on whether it’s working or not, needs time to play out. they have advantages going for them 1) pure audio platform 2) scale 3) data gives them informational advantage on acq 4) conquered pod mkt already

look at top charts, ~40% are exclusives usually
the most valuable ad-shelf space is on the audio content itself via SAI; monetization is still super low compared to its efficacy and ad-load definitely low as well in most podcasts. Advertisers usually follow users, typically with a lag as Ben Thompson has said. Huge opportunity
I think where many people differ is on how much of that optionality is out of the money vs. already starting to play out in front of us. I’m on the latter camp.
Don’t think they need eco-system control either, open ended is best hence their ubiquity strategy others lack
No comments here! haven’t done the work.
Fair point, but I sleepwell knowing the management team has done an incredible job piloting (and stabilizing) one of the toughest planes out there (one that was essentially broken), and has even changed engines mid-air a few times.
Obv it all comes down to this, underwriting your investment in the LT vs. current valuation. It’s what makes a market and thus the opportunity.
this last point I think is an invalid bearish argument honestly, he’s rich, has worked immensely hard and done well, loves football and Arsenal of course

I’ll let him do what he wants on his spare time, he’s earned it so far on my book.
Again, this is all for the sake of a healthy discussion. This platform is great for this and I get a ton of value out from it so thank you.

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More from @SleepwellCap

18 Jul
A few highlights from a Global Music Report by @MusicAlly

-Over 60% of all Mexican label revenue came directly from Spotify
-The World’s streaming mecca, according to Spotify
-20mm people use a streaming service, while 80mm people own a smartphone (& quickly growing)

Amazon Music passed Deezer to become the second DSP in number of subscribers, behind Spotify, which
has 61% of total subscribers and contributed 45% of all Brazilian recorded music revenues in 2019.

Don’t have a very big Apple hardware user base in the country
Brazil (cont.)

Paid streaming accounted for almost three quarters of recorded music revenues in the region

Overall, Brazilians became more aware of the benefits of music streaming services, and started adopting and using it more.
Read 54 tweets
5 Jul
A big part of becoming a better investor is not very intuitive: Studying non-investing related fields like psychology, history, physics, complex adaptive systems, non-linearity, probability and statistics.

Here are my 10 favorite non-investing investing books📚

Thread 🧵👇
1) Influence: The Psychology of Persuasion by Robert Cialdini

Needs little introduction. If you’ve heard about biases like Social Proof and Commitment & Consistency, they originated here. A Munger favorite.

2) How Not to Be Wrong: The Power of Mathematical Thinking by Jordan Ellenberg

Connects math to various real-world issues in non-intuitive ways. Sometimes in investing we have to use math in creative ways (without overcomplicating it)

Read 11 tweets
4 Jun
Lots of debate around the Labels vs. $SPOT narrative in the last two days with UMG news. Also a lot of misunderstandings.

Long thread with my views and clarifications

Let’s go 💽👇🏽🎶
First off, two basic truths:

1) This is a supplier-customer relationship that is symbiotic: they need and benefit from each other
2) They will both benefit from the growing pie of music industry revenues, it’s not one vs. the other necessarily. They can both win.
The label is the supplier of the content, who finds, finances, develops and distributes it across all the relevant mediums (streaming, radio, physical, TikTok, films) maximizing exposure for their artists. Also owns valuable back-catalog.
Read 21 tweets
25 May
Yesterday thanks to @TSOH_Investing, I took part in a very interesting $SPOT discussion with great people, after which we shared a lot of great resources to learn about the industry and the company.

Anyone interested in studying this will gain a lot from them. Enjoy!

1/n 🧵👇
Matt Ball’s Audio Essay @ballmatthew

Read 18 tweets
17 Feb
What is the best way to learn about $CSU.TO ? (besides reading the President’s letters and filings✅✅)

Any good write-ups, podcasts, news articles, reports, slides etc…

thank you!
this one is excellent, just finished it; thanks @the10thman1 the10thmanbb.com/investment-ide…
always a pleasure to read @LibertyRPF take on anything as well libertyrpf.substack.com/p/92-mark-leon…
Read 12 tweets
6 Feb
Let's talk about our favorite orange truck 🚚

A thread on $UHAL 👇 Will America start moving again?
Company Overview: AMERCO is a holding company with 4 businesses: 1) Self-Moving 2) Self-Storage (both lumped into the same segment) 3) Property & Casualty Insurance (mostly for trucks) 4) Life insurance. The first two are 90%+ of revenues.
Industry Overview: 40-50mm people move each year. 3/4 will move using Do-It-Yourself. 2/3 of moves are local (important for later). A DIY move will cost less than half of a typical van-line move. A well known fact: Moving is one of the most stressful events of your life.
Read 12 tweets

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