Spotify Technology S.A. (SPOT, Financial) is a global digital music service offering on-demand audio streaming via paid premium subscriptions and a free ad-supported model. Its shares detracted from performance this quarter due to a mixed gross margin outlook, but we see potential for near-term margin upside given the company’s two-sided marketplace strategy. Over the long term, we view Spotify as a winner in the music streaming space. The company has the potential to gain over 100 million subscribers in the next five years due to its scalable and sticky core product and its growing library of podcasts.
From Ron Baron (Trades, Portfolio)'s Baron Partners Fund third-quarter 2019 shareholder letter.
