In this briefing:
1. Spotify: Playbook for Online Platforms to Turn Profitable – Implications for Meituan Dianping
- Our analysis of how Spotify Technology Sa (SPOT US) turned profitable in 4Q18 reveals three key ingredients: critical mass in sales, GM progression, and core business diversification.
- With sales reaching critical mass, this would allow fixed costs to be spread out in such a way that opex/unit is lower than GP/unit.
- Progression in GM and core business diversification strategy are worth monitoring.
- Implication: Meituan Dianping’s (3690 HK) core business is ahead of iQIYI Inc (IQ US) in terms of profitability inflection point timeline.
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