We are looking at Spotify (SPOT) today.
Shares of Spotify were up more than 12% on Thursday. The music streaming platform has been betting on the future of podcasts for a while. And, it was the podcast category that drove the stock price. An exclusive deal with Warner Bros. would bring a series of narrative-style podcasts featuring superheroes such as Batman and Wonder Women. It didn't hurt either that a new podcast with Kim Kardashian's involvement was announced.
The company is unprofitable and doesn't have an impressive gross margin. However, it generates free cash flow and has no debt, which means it can fund its future without worrying about money too much.
Content is the savvier of streaming services. We've seen a similar strategy working for video streaming platforms. Superheroes are doing their thing and saving streaming services, once again.
It sure seems that Spotify is on to something with original podcast content. It is worth watching the stock.
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