Spotify's CEO & Co-Founder Daniel Ek Joins Author & Comedian Trevor Noah To Discuss The Future Of Storytelling At Spotify Beach

Spotify CEO Daniel Ek has had a lot to smile about since chatting to Trevor Noah in June 2023 (Spotify/Getty Images)

1 in 12 people on Earth is now a Spotify monthly active user

Spotify stock surges after the streaming giant beat expectations and reported its first-ever annual profit.

2/4/25 12:58PM

After spending years struggling to turn a profit, Spotify’s financial 2024 Wrapped was music to the ears of investors.

Off the back of better-than-expected Q4 earnings this morning — with soaring subscriber numbers and bumper cash flows that helped the company post its first-ever full year of profitability — Spotify shares are soaring 10%, reaching all-time highs that are up ~150% from a year prior.

Track record

The audio streaming giant reported record user numbers, adding a total of 35 million monthly active users (up 12%) to hit 675 million in total, beating analyst expectations and marking the largest Q4 in Spotify's history. (With Earth’s population at about 8 billion, that means about 1 in 12 people in the world is a user.) The share of ad-supported users on the platform remained close to ~60%, and Premium subscribers grew some 11% year over year to 263 million.

Despite multiple rounds of price hikes, the latest of which saw the cost of Spotify Premium rise to $11.99 a month, the company is succeeding in keeping users locked in, with churn rates staying low and the tally of free listeners continuing to tick up. It seems that an emphasis on product features is working to make the service more appealing to audiophiles: the report outlined that Spotify’s 10th annual Wrapped last year was its biggest ever, reaching 184 global markets and driving user engagement up 10% year over year.

Fine tune

Amped-up user numbers contributed in no small part to the first full-year profit in Spotify’s history. The company reported that quarterly operating income rose to €477 million ($485 million) — a U-turn from the prior year’s €42 million loss — bumping net income to a total of €1.14 billion ($1.2 billion) for 2024.

Beyond listening power, the “efficiency strategy” championed by founder and CEO Daniel Ek is also paying off: in Q4, gross profit margins climbed to a record 32.2%, free cash flow generation reached an all-time high of €877 million, and operating expenses declined 16% year on year. Indeed, the company has honed in on finally achieving profitability in recent years, overseeing a series of company-wide layoffs and cutting some marketing spend.

Play on, pay out

Looking forward, Ek has said that Spotify will “continue to place bets that will drive long-term impact,” including maintaining these levels of efficiency while focusing on diversifying content, prioritizing new partnerships — including, most recently, with Universal Music, the biggest music company in the world — and doubling down on creator monetization programs.

On top of the hot-button issue of audience-driven payouts for artists (Spotify was keen to tell everyone that it forked out over a record $10 billion to the music industry in 2024), the company also outlined plans to enhance business offerings for increasingly important podcast creators and authors with new, tailored payout schemes.

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FT: Meta considering “tens of billions” in new capital to fund AI

Just days after Google announced a monster $85 billion upsized equity raise, the extremely profitable Meta is seeking to sell “tens of billions of dollars” in stock, according to a new report from the Financial Times.

Meta is planning on spending between $125 billion and $145 billion on AI capital expenditure this year alone.

Shares dropped more than 5% on the news.

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FT: Anthropic staff helping the NSA use Mythos for offensive cyberattacks

Anthropic’s Mythos AI model was deemed too dangerous to release to the public, with the company citing its ability to orchestrate novel cyberattacks.

And that’s just what the National Security Agency is doing, with the help of Anthropic staff embedded at the agency, according to a report from the Financial Times.

Only a small number of companies and US allies have been given access to the advanced model, which means America’s adversaries have not had the chance to shore up their defenses against the AI model’s new offensive capabilities.

The arrangement is especially unusual as the Pentagon has deemed Anthropic’s AI a national security supply chain risk — effectively blacklisting it for defense work — in response to the company’s refusal to allow its technology to be used for any legal application, which could include autonomous killing or mass surveillance. Anthropic is currently suing the US government to fight the determination.

US National Security Agency using Anthropic’s Mythos for cyber attacks

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Longtime Tesla bear JPMorgan upgraded Tesla and raised its price target to $475 from $145

For more than a decade, JPMorgan was Wall Street’s most stubborn Tesla skeptic, anchored by auto analyst Ryan Brinkman’s strict focus on traditional car fundamentals and near-term delivery numbers.

But JPM recently handed coverage of the stock to a new analyst, Rajat Gupta, who is throwing that playbook out the window. In a note Friday, the firm upgraded Tesla to “neutral” from “underweight” and raised its price target 228% to $475 from $145. (The analyst consensus on FactSet is $403.) Instead of focusing on the company’s struggling vehicle business, the new analyst is orienting himself more toward Tesla’s idea of the future, now modeling Tesla’s physical AI and robotaxi fleets all the way out to the year 2040.

Here are the main reasons for the capitulation:

Looking past the car lot: Gupta argues that Tesla “is at the forefront of physical AI, entering uncharted TAMs” and therefore “deserves the benefit of the doubt to be valued on LT earnings potential” rather than near-term speed bumps.
Unmatched vertical integration: Tesla’s control over everything from battery cells to custom silicon gives it a massive moat. JPM notes this starting point advantage is “unmatched at an industrial level scale” and “still somewhat under-appreciated and misunderstood.”
The AWS flywheel effect: Deploying Optimus robots inside its own factories “should not only lower COGS for the base automotive business, but more importantly, help validate the product at an industrial scale.” Gupta called it “a classic flywheel effect, somewhat analogous to AWS and Kiva at AMZN.”

For Tesla bulls who have argued for years that this is an AI company and not a carmaker, JPM’s sudden $3.9 trillion valuation model is the ultimate validation.

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