-Written by Fernando-
It might appear that Spotify might be in trouble based on recent events like their stock price being at its lowest stretch for the past 3 months and profitability numbers falling short but I think there is more to this that people need to take into account. Here is a list of the negatives that drive negative views on $SPOT:
- $SPOT price has fallen to a low -60% per share.
- Talks of a new app created by TikTok that is meant to compete with Apple Music ($AAPL), Prime Music ($AMZN), and Spotify ($SPOT).
- Profitability is still an issue with the company operating at a loss of 194 million euros.
- Controversial acquisition of the Joe Rogan podcast. This has brought a lot of debate over the company’s intention on politics but it is still a great addition to their attempt to become giants in podcast streams in addition to music streaming.
Despite these being valid concerns for a company one would like to invest in, critics must remind themselves that Spotify is still the leader in active monthly users and account numbers; 433 million users and 188 million of those users being paid subscribers. A competitor like that of a TikTok app is interesting but subscribers for these apps are very sticky and it would take a lot of competitive effort to pull them away from Spotify. This might not be enough to lead people towards investing but the important part to note when talking about subscribers in the audio streaming apps is their stickiness. I am someone who has tried many different music streaming apps but has stayed with Spotify because it was my first and that is where all of my playlists are. There is no reason for me to abandon my Spotify subscription as I find it more valuable than its closest competitor in Apple music. I imagine that the driver that is gathering these loyal subscriptions is their student deal. Spotify offers a student subscription at a discounted price of $5 included with Showtime and Hulu! While I was in college this was huge for me and really tied me in as a happy subscriber for 4 years. Since then I have tried my free 6 months with apple music but I found my way back to Spotify because of my history and saved playlist that I, and many others that I have personally talked to, do not wish to abandon.
In conclusion: I have a lot of faith in a Spotify recovery considering their loyal subscriber numbers continue to increase without compromising their subscription price the same way Netflix ($NFLX) has. I can ultimately see it going either way, where $SPOT ultimately continues to drop in price because of profitability issues, but with hopes of ads through podcasts this can likely change. I love the Spotify app and feel confident in a recovery for their stock price but don’t take my word for it; always do your own DD before making any investment decisions.