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KEY POINTS OF DISCUSSION
- BULL CASE: We believe SPOT has two clear advantages relative to the competition, and ample room for subscriber/ARPU growth despite both elevated churn and market share. SPOT is also in the early inning of ramping its ad business, which still has considerable runway relative to MAU engagement. Collectively between the two lines, there may be a pathway toward profitability, which will discuss in more detail during the call.
- BEAR CASE: SPOT is distributor that we suspect is hostage to its three largest suppliers in a largely commoditized space, and the progression of that relationship remains an ongoing risk to SNAP's profitability and competitive positioning. Further, that risk only grows the more SPOT separates itself from the pack; creating somewhat of a perverse relationship where its success and risk are directly correlated.
- NET NET: We are currently leaning more bullish than bearish for the time being, but we are still assessing the near-term setup and awaiting guidance before taking a position. If we don't like either, we may go the other way. We will detail the puts and takes in more detail during the call.
Let us know if you have any questions in the interim.
