The digital Gutenberg shows a vast revenue growth, right on the verge of profitability

In this report, analyst Alexandra Stertman takes a deep-dive into Storytel, a Swedish company that records, distributes, and publish literature on both national and international markets. Within the company, there are two main segments – Printing and Subscriptions, with the latter including streaming of e-books and audiobooks. Storytel is expected to gain market share on the e-book and audiobook market through acquisitions of leading publishing companies and by personalizing the user experience.

Investment highlights:

  • Geographical expansion and new consumer patterns will lead Storytel to profitability by 2021E as expressed by an estimated EBIT margin of 0,8%. Established markets becoming profitable and new market entries will eventuate in an expected revenue growth of 31,0 % CAGR 2020E-2023E.
  • Storytel is expected to grow their subscription base with 35,0 % CAGR between 2020E and 2023E. They have expanded to six new markets in 2018 and four new markets in 2019, leaving the opportunity to expand to both eastern Europe and Asia in the future.
  • Storytel is currently trading at a discount to four comparable companies which is deduced by peer analysis and historical valuations, yielding a potential upside of 19,3 % based on a target EV/EBIT multiple of 15,0x.

To get the analyst’s full view, please see the report below: