The news of Spotify's growth continues to roll in seemingly every week. The streaming giant just announced a deal with PlayStation and Sony that would launch a revamped service PlayStation Music across and PlayStation Network by connecting users's Spotify accounts to their gaming accounts. With all of the expansion that company has gone through in the past year or two, it has become one of the darlings of the music industry and tech startup world, where money flows like water. Spotify is seeing the payoff of that expansion with increasing valuations of its company, despite not being able to turn a profit. The latest valuation, according to a report from market research company Manhattan Venture Research, according to Billboard, now has the Swedish streaming service sitting at $5.7 billion.
Analysts believe the $1.7 billion increase over its last $4 billion evaluation in September 2013 is warranted because of strong subscriber and revenue growth.
Spotify is not stopping there, though. Rumors reported by the Wall Street Journal indicate that it is looking to raise approximately $500 million from Goldman Sachs to elevate its valuation to a level close to $7 billion or $8 billion. Nothing has been settled as of yet, but the intent to raise even more money is there.
The current valuation of $5.7 billion puts Spotify at an elite level in the music industry. Pandora is currently sitting at a $3.5 billion market evaluation and it has already gone public. After a recent round of funding, SoundCloud reached the $1 billion plateau. It is showing the hunger to grow even larger and the report rightly assesses many potential areas for growth, including integration with automobiles, which Pandora has done, and Internet service providers, which rival Rdio has done with its new Caribbean and South Asian expansion.
It is a major disruptive force that has already shown the capacity to create opportunities for growth with Uber and PlayStation, but still lacks the profitability. Investing in Spotify comes with risks but the rewards could be great, as the report points out.
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