$IHRT owns at least one over-the-air radio station in 153 US cities. It claims to reach 9 out of 10 Americans daily. The company has a market cap of $2.7B and net debt of $6.3B for a total value of $9B. What do you get for that $9B? $3.5B of revenues, growing at low teens. IHRT is expected to generate $500M of Free Cash Flow in 2023.
$SPOT has almost 400 million listeners, larger than the population of the USA and 165 million of those pay a monthly fee. It has a market cap of $30B and net cash of $1B for a total value of $29B. For that $29B you get $12B of revenue growing at mid-teens with every person in the world a potential customer. SPOT is expected to generate $750M of FCF in 2023.
SPOT is cheaper on total value/sales than IHRT with no debt, faster growth and a much larger market. IHRT generates more cash flow today but has a massive debt load to repay. Which one should you own?
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