![]() This argument can be supported by the company's lower marketing spending during the quarter. The 5% threshold of network effect refers to the point at which a network effect begins to take hold and becomes self-sustaining. ![]() This is not surprising as Spotify's total users count of 515 million as of Q1 2023, is 7.4% of the global population of 7 billion and has already passed the 5% threshold of the network effect. Moreover, it implies despite the macro headwind, the streaming music industry is still under-penetrated. This impressive growth in premium subscribers is a testament to the value that users place on the service provided by the company. Its ad-supported MAU counts grew by 26% to 317 million users. In Q1 2023, the company grew its premium subscribers by 15% to 210 million users, a similar cadence as Q4 2022. Key Takeaways from Q1 2023 Earnings: Revenues boost by its user base growth It is a popular music streaming service that allows users to access millions of songs, podcasts, and other audio content. ( NYSE: SPOT) was founded in Sweden in 2006. In the midst of market uncertainties, this subscription stock represents a relatively stable and reliable investment opportunity. Its premium gross margin expansion can trigger stock valuation multiple expansion. The company's ability to consistently acquire new premium subscribers while reducing marketing spending is a positive sign of its future success. The company's marketplace has the potential to become a major player in the music industry. ![]() ![]() MoMo Productions/DigitalVision via Getty Images Investment Thesis ![]()
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