Can SoundCloud Really Fetch a $1 Billion+ Sale Price?

Everyone loves a comeback. But is SoundCloud’s comeback worth $1 billion — or more?

Just when you thought the outlandish music industry acquisitions were over, there’s this. SoundCloud is suddenly preparing for a sale, with a possible price tag surpassing $1 billion — that is, according to a report surfacing this weekend in Sky News.

The report noted that investors Raine Group and Temasek Holdings ‘have begun interviewing investment banks about a prospective auction of the company,’ though it’s unclear who’s nibbling on the line. Raine and Temasek are majority owners, with Sirius XM investing a healthy $75 million in the platform back in 2020.

Outside of a shadowy ‘insider,’ Sky offered no sources for its projected sale price. That has raised some questions over who’s leaking — and why.

Back in 2017, Raine and Temasek swooped in to rescue SoundCloud, which was on the brink of collapse. Now, it appears that SoundCloud’s distressed buyers are aiming for a ‘buy low, sell high’ exit door, with 2024 potentially offering a more welcoming M&A environment.

Current CEO Eliah Seton has been credited with helping to turn the ship around at SoundCloud, though profitability has been largely elusive over the years. That could scare off some buyers, especially in this climate, though SoundCloud is actively trimming its cost overhead.

Just last year, the company shaved 8% of its workforce in a bid to finally steer its financials into the black. But whether the company can generate consistent, quarter-after-quarter profitability scorecards remains unclear.

It’s worth noting that SoundCloud rival Spotify has also struggled to maintain profitability. Similar to SoundCloud, Spotify is taking serious steps to shore up its overhead and create a financially stable company. Both companies are responding to significant shifts in the investor landscape, with factors like inflation and soaring interest rates radically reshaping risk appetites.

Investors and Wall Street have also been moving away from longer-term, growth-oriented plays and demanding greater financial accountability — and profitability.

Beyond the financials, SoundCloud remains a strong music brand among artists, fans, and the industry. Culturally, SoundCloud has found itself at the center of entire musical movements, most notably ‘SoundCloud Rap.’ Those communities and musical scenes are absent on platforms like Spotify, which focuses more on platform-curated experiences and staff-created playlists. SoundCloud, by contrast, has always fostered a more open, less structured approach with few rules for uploading artists and fans.

SoundCloud itself has remained mum on the sale speculation. And the sale process itself isn’t slated to start until a few months, according to Sky.