Amazon, Apple, Facebook, Google - Fifth Horseman Spotify $SPOT?

Scott Galloway 2018's Fifth Horseman Prediction

L2inc.com video above published on May 24, 2018: Amazon, Apple, Facebook, and Google have a combined market value greater than the GDP of France. What company has the potential to join them?

Editor's note: Last year Scott Galloway (speaker in the video) was touting Netflix, this year Spotify. Color me "skeptical," although a company can be very successful without becoming a "Fifth Horseman." If you are looking for a global "Fifth Horseman" consider the largely still untapped digital online streaming media potential of Disney $DIS (market cap $148.10B), or look at the potential beyond China for Tencent (WeChat) (market cap US$498.37B) already the world's fifth-largest internet company by revenue, or Alibaba $BABA (market cap $523.35B).

NYSE: SPOT (market cap 1 Jun 2018: $28.36B):

Spotify Technology
Principal domain: spotify.com
Headquarters: Stockholm, Sweden CEO: Daniel Ek (2006–) Founded: 2006, Stockholm, Sweden Subsidiaries: Spotify AB, Spotify USA, The Echo Nest, Tunigo AB, Spotify USA Inc, Spotify Singapore PTE. Ltd., Loudr, CrowdAlbum, Inc. Founders: Martin Lorentzon, Daniel Ek

Video sources:

(0:09) Yahoo Finance, May 2018. (0:09) “France GDP,” Trading Economics, 2016. https://bit.ly/2IJgqw2 (1:35) Yahoo Finance. (1:45) “4 in 10 Spotify Users Pay for Premium,” Statista, May 2018. https://bit.ly/2LrGYiU (1:53) “Spotify Misses On Revenue In First Earnings Report With 170M Users,” TechCrunch, May 2018. https://tcrn.ch/2xaG8E7 (1:59) “Apple Music Hits 48M Subscribers; Should Spotify Worry?” NASDAQ, April 2018. https://bit.ly/2GLt5Zz (2:25) Yahoo Finance, May 2018. (3:00) “Apple Music on Track to Overtake Spotify in U.S. Subscribers,” The Wall Street Journal, February 2018. https://on.wsj.com/2EEd5sV (3:18) “Spotify’s Losses Widen as Royalty Costs Pile Up,” Statista, March 2018. https://bit.ly/2jAKTjx (see below) (3:24:) L2 Analysis of CNBC, NASDAQ, Yahoo Finance Data.

Transcript (auto-generated, unedited)
00:00 [Music]
00:01 the four Amazon Apple Facebook and
00:04 Google have aggregated market
00:05 capitalization greater than the GDP of
00:07 France the accretion of stakeholder
00:10 value for consumers investors and
00:12 employees that these companies is
00:14 staggering five traits that identify a
00:17 company that can become a
00:18 trillion-dollar market capitalisation
00:20 company or as we refer to it the t
00:22 algorithm one their global an offer a
00:25 product that permeates cultural
00:27 boundaries to they apply machine
00:29 learning or AI or whatever you want to
00:31 call it agility network effects that
00:33 basically leverage behavioral data that
00:35 senses your tastes and tailors the
00:37 product to you they employ a Benjamin
00:39 Button effect unlike a car rolling out
00:42 the assembly line or a toothpaste tube
00:44 that has the cap twisted off they don't
00:46 decline in value they actually get more
00:48 valuable with you similar to Google the
00:51 search algorithm sees everything
00:53 everyone else is seeing or the algorithm
00:55 sees and every time you search the
00:57 algorithm gets one three billions better
00:59 for the next user they are likable as
01:01 companies we personify them and we
01:04 perceive them as friendly and is doing
01:06 good in the world a lot of debate around
01:07 how important likability is these days
01:09 lastly they're viewed as a career
01:11 accelerant the team of the best players
01:13 wins and you have to be seen as an
01:14 organization that abandons traditional
01:16 hierarchies and can give a twenty
01:18 five-year-old the responsibilities role
01:20 and compensation of a 35 year old in
01:22 2017 we posited Netflix would be the
01:26 fifth Horseman the firm had become the
01:27 operating system for the second most
01:29 valuable screen in our lives television
01:31 since we labeled Netflix the next 300
01:34 billion dollar firm the stock has
01:35 trebled in value so who's our 2018
01:38 prediction for the fifth Horseman
01:40 Spotify a firm with a hundred and
01:42 seventy million users seventy five
01:44 million of whom are premium subscribers
01:46 the firm registered a billion in revenue
01:49 last quarter representing thirty eight
01:51 percent year-on-year growth that's a
01:52 billion euros which I think's about 1.1
01:55 billion u.s. and Spotify accounts for
01:58 36% of premium music subscribers
02:01 globally young people spend an eighth of
02:03 their waking hours listening to music
02:05 just as real estate identified the most
02:07 valuable companies in the 20th century
02:08 whether were Sears or Walmart real
02:11 estate identifies the most valuable
02:13 companies of the 21st century
02:15 specifically whatever apps are on your
02:17 home screen
02:17 are typically companies were somewhere
02:19 between 100 and 900 billion yet there is
02:22 one with the best real estate on your
02:24 phone and it's only worth 28 billion for
02:27 now Spotify among music streaming
02:29 services Spotify as the best technology
02:31 merchandising and brand pandora was
02:34 first but has no social aspect and is
02:36 only available in the US and is
02:37 seriously uncool what's better than a
02:39 prophylactic having ad-supported
02:41 Pandora's you are about to get down you
02:43 are not going to have sex
02:45 bling ad-supported Pandora Apple music
02:47 should be number one given their
02:49 distribution advantage but Spotify has
02:51 more credits young people and
02:54 influencers and is a better platform for
02:57 discovering and sharing music Apple
02:59 music actually grew faster than Spotify
03:01 in the US last quarter why because Apple
03:03 has monopoly power is abusing that power
03:05 and should be broken up but that's
03:07 another talk show like most ambitious
03:09 digital players Spotify is investing
03:12 which is Latin for hemorrhaging money
03:14 Spotify lost 380 million euros on 4
03:17 billion in sales in 2017
03:20 Spotify currently trades at a hundred
03:22 and fifty dollars a share or twenty
03:24 eight billion dollars in value or five
03:26 times revenues that's an Amazon like
03:28 multiple so as Spotify worth twenty
03:31 eight billion dollars in its current
03:33 state maybe but maybe the better
03:35 question is is it worth fifty to a
03:37 hundred billion dollars to one or more
03:38 of the four and the answer is yes it's
03:40 hard to see why Amazon or Netflix
03:42 wouldn't endure seven and twenty five
03:45 percent Aleutians respectively and pay
03:47 fifty billion dollars plus to submit
03:49 their leadership position and what may
03:51 be the last media battleground music our
03:54 prediction Spotify stock doubles in the
03:57 next 12 to 24 months the next horsemen
04:00 Spotify my Spotify playlist includes
04:04 Katy Perry Arielle Grande and Britney
04:06 Spears or as I like to call it I'm gonna
04:07 get that pregnant list is that a hate
04:10 crime
04:12 we'll see you next week they don't what
04:15 is what what they don't know what is
04:17 what they just struck swish
04:21 [Music]

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Tech Review | European Union 'Going Gangster' On Big Tech? (video)

Tech Review (TR 2018-04-14)--Domain Mondo's weekly review of tech news with commentary, analysis and opinion: Features • 1) European Union 'Going Gangster' On Big Tech?, 2) Spotify $SPOT Direct Listing IPO--What We Learned, 3) Investing: The Week, Investing Notes, 4) ICYMI Tech News.

1) European Union 'Going Gangster' On Big Tech?

L2inc.com video above published Apr 12, 2018: In light of recent events, a revisit of Professor Scott Galloway's predictions about Facebook, regulation, and 'the Zuck'. Transcript here. See also Mark Zuckerberg Refuses to Admit How Facebook Works | Bloomberg.com: "The CEO and the social network appear uncomfortable with the bedrock of its business." [Editor's note: commercial exploitation of the personal data of its users is at the core of Facebook's business model.].

See also on Domain Mondo this week:

• Facebook Data Privacy Week On Capitol Hill: The $FB Fallout (video)

• European Union WP29 To Facebook $FB: "Sorry Is Not Enough"

• Hearing April 11: Facebook $FB Transparency and Use of Consumer Data

• News Review Update: Senate Hearing April 10 on Facebook Data Abuse

2) Spotify $SPOT Direct Listing IPO -- What We Learned:

The music streaming company Spotify opted for an unconventional direct listing, instead of a traditional initial public offering, and it was not a disaster--Financial Times video above published Apr 4, 2018--check current $SPOT price NYSE: SPOT.

See also: Spotify direct listing piles risks upon risks | Reuters.com

3) Investing

The Week: a) NASDAQ Composite b) S&P 500 Index  c) DJIA  -- the Dow, S&P, and NASDAQ end the week in the black.

Wall Street's Charging Bull, still running--

Investing Notes:

• High stakes, high expectations as [Q1 2018] earnings season heats up | Reuters.com.

• Were Trade Wars Inevitable? | blogspot.com:  Answer: Yes, or at least "Trade Re-negotiations"--"Globalized, financialized trade flows are neither "free" nor "fair," ... the major economies and their citizenry are finally facing the reality that trade is Darwinian, not win-win." 

• EU: Still in the Danger Zone | INSEAD.edu: "Nowhere in the EU, in the last decade – not even in Greece – have anti-European populist parties achieved as spectacular a breakthrough as in Italy last month (see table). For the second time since the end of the Cold War, the old political-party system in Italy has collapsed. This time anti-European populists have been the primary beneficiaries." See also: Yanis Varoufakis: ‘Greece is a debtors’ prison’--TheGuardian.com and Europe’s Slowing Economy Poses Challenge for ECB | WSJ.com.

• More reasons why UK banking and finance will thrive post-Brexit: By Jan 1, 2019, all major UK banks must ring fence their core banking business from their investment banking ops — a measure authorities in the EU refuse to even contemplate. Note also:

Avast chooses London over New York for $4bn listing https://t.co/N3cRnsmPHd

— Financial Times (@FT) April 12, 2018

• As Malls Get Crushed, Commercial Real Estate Prices Fall to Lowest in Nearly Two Years | WolfStreet.com: "Leverage is why the Fed has been worried about the bubble in CRE." See also Google Saves Manhattan Office Market. Chinese Buyers Vanish | WolfStreet.com.

• How Southern California Became Home to Bond Kings | Bloomberg.com money quote: "... the system is averse to change because so many of its key players continue to profit from its complexity and lack of transparency."

4) ICYMI Tech News:

• No Sympathy for Amazon $AMZN | NewRepublic.com: "Trump's attacks on the company aren't nearly as alarming as the government largesse that helped it become a tech behemoth."'
• Google Chromebooks fight malware, get security experts' approval | CNET.com: "Chrome OS has provided one of the most robust cases of “usable security” available ... Chromebooks are a smash success. Nearly three out of every five machines used in schools run the Chrome OS, according to researcher Futuresource Consulting ..." See also Google employees organize to fight cyber bullying at work | Reuters.com.

• Google Developers Blog: Browse the updated Google I/O 2018 schedule and reserve seats for Sessions | developers.googleblog.com

• Coinbase is launching Coinbase Ventures, a $15M seed-stage fund to invest in cryptocurrency and blockchain startups. See also: Cryptocurrency-mining malware: Why it is such a menace and where it's going next | ZDNet.com.

• Apple $AAPL: Piper Jaffray reports 82% of American teenagers currently own an iPhone, up from 78% last year, and 84% say their next phone will be an iPhone--BusinessInsider.com. See also Apple says all its facilities now powered by clean energy | Reuters.com. Note also: "Apple ended 2017 with a cash balance of $285 billion and a debt position of $122 billion for a net cash position of $163 billion."--Apple: Time For The Cash Flood  | SeekingAlpha.com. Leaked Apple memo says it found 29 ‘leakers’ last year, 12 arrested--Bloomberg.com.

• Calling Out China's Dishonest Discourse about "Free Trade and Tariffs"--A Rebuttal of Jack Ma's Op-Ed Piece on China Being Open | Bloomberg.com: "[Jack Ma says]: "It is therefore ironic that the U.S. administration is waging a trade war at a time when the largest potential consumer market in the world is open for business."  That's not the case ..." But see also China takes the lead in pioneering retail | Axios.com.

• Facebook: Why Investors Should Pay Attention To Indonesia - Facebook (NASDAQ:FB) | SeekingAlpha.com: "Indonesia currently makes up 6% of Facebook's user base, but only 3.0% of revenue. This could change rapidly. Indonesia and India combined could make up 15-18% of earnings in a few years and be a source of positive surprise."

-- John Poole, Editor, Domain Mondo  

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Tech Review | YouTube Targets Apple $AAPL Music and Spotify $SPOT

Tech Review (TR 2018-04-07)--Domain Mondo's weekly review of tech news with commentary, analysis and opinion: Features • 1) YouTube Targets Apple $AAPL Music and Spotify $SPOT, 2) But Will Music Streaming Ever Be Profitable?, 3) Investing: The Week, Investing Notes, 4) ICYMI Tech News.

1) YouTube Targets Apple $AAPL Music and Spotify $SPOT 

Bloomberg.com video published Mar 23, 2018: YouTube is about to launch a paid music subscription service. It's trying to steal listeners from Apple Music $AAPL and Spotify $SPOT, which went public this week: Spotify’s direct listing allowed investors and employees sell up to 55.7 million ordinary shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering--Digging Into The Spotify IPO - Spotify (Pending:SPOT) | SeekingAlpha.com:  "founders Daniel Ek and Martin Lorentzon own 37.3% and 43.1% of the combined voting power, respectively, meaning shareholders will not have influence on the major decisions of the company."  See https://www.nyse.com/quote/XNYS:SPOT (Spotify share price).

2) But Will Music Streaming Ever Be Profitable? Google $GOOG $GOOGL and Apple $AAPL may not care since the former is mainly trying to sell advertising while the latter is capturing market share for its devices and content channels. Amazon $AMZN likewise may be willing to break even. That may leave other streaming service providers like Spotify and Pandora in a tough competitive position:

 source: Statista.com

3) Investing

The Week: Markets ended the week DOWN on Friday--Wall Street drops over 2 pct on trade worries | Nasdaq.com--Worry, Fear? Let them wet their pants on Wall Street, ignore the noise--I'm still looking for the NASDAQ Composite to break to the upside this year, 3rd time the charm?--

Wall Street's Charging Bull--he's laughing at us right now:

Investing Notes:

• Brexit: The U.K. Is Doing Just Fine, Thanks | WSJ.com 23 Mar 2018: "For a country supposedly crawling out of the ruins of the Brexit vote, the U.K. has been having a strikingly good year so far. The number of people working stands at a record high, and income inequality is approaching a 30-year low, according to the Office for National Statistics. New orders for manufacturers are at their highest level in a generation, and employers in general are struggling to find enough staff to cope with demand. Even the (relatively new) national happiness index stands at a peak."
• Eurozone: Jean-Claude Trichet: We still live in an ‘abnormal situation’ | POLITICO.com: The former ECB head talks about grappling with the euro crisis and reforming the eurozone to avoid future ones ... “I’m seriously worried,” he says. See also Rise of Italian nationalism a blow to European economic stability | TheHill.com.

• Collapse of Cryptocurrencies in Q1: Even the Biggest Crashed 67% to 88% | WolfStreet.com

• Still Underwater: My 10-Year Odyssey Through America’s Housing Crisis | WSJ.com: "Misery over real estate hasn’t ended—2.5 million homes are still worth less than their mortgages ... the story of one Wall Street Journal reporter’s upside-down American dream."
• Trump Hits 50% Approval Rating, Surpasses Obama At This Time In His Presidency | ZeroHedge.com April 2, 2018. [Editor's note: the mainstream media narratives are getting jaded, which may be why Trump's poll numbers appear resilient and to the upside in the face of such unprecedented unfavorable media bias. My take: the American people do not like nor trust bicoastal "elitists"--in media or inside the Beltway. If I were a Dem politico, I wouldn't underestimate Trump, he just keeps tweeting, etc.  As far as markets are concerned, you have to accept and adapt to the environment as it is, Trump is Trump, a fixture in the financial 'landscape' for now. Filter out the noise which dominates most 'news' today, something Warren Buffett has been telling us to do for years.

4) ICYMI Tech News:

• Google-Led Plan to Upend Wireless Industry Gains Momentum | Bloomberg.com--How Google, carriers, and startups plan to capitalize on the Citizens Broadband Radio Service spectrum, likely to be freed from US military control this year--A bold plan to open up spectrum could rock the wireless industry and prove a $260 billion win for consumers. See also Alphabet, Quietly, Just Stunned The World | SeekingAlpha.com: "Waymo and Honda (NYSE:HMC) reportedly will build a self-driving delivery vehicle together."
• Google is equipping more rural school buses with Wi-Fi and Chromebooks | TheVerge.com: a partnership between Google and the Consortium for School Networking (CoSN), spread across 16 districts in 12 states.
• Now's The Time To Buy This Discounted Tech Giant | Alphabet Inc. | SeekingAlpha.com

• Samsung's Smartphone Business Could Face Some Headwinds | forbes.com: Samsung is losing ground to Chinese smartphone manufacturers in growth markets.
• Apple Plans to Use Its Own Chips in Macs From 2020, Replacing Intel | Bloomberg.com

• The End of Windows | Stratechery.com by Ben Thompson: "Nadella, though, had a short-term problem: Microsoft’s most important customers — enterprises — hated Windows 8."

-- John Poole, Editor, Domain Mondo  

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