Why Did Spotify Shares Grow by 7%?

Why Did Spotify Shares Grow by 7%?

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Today, I’ll speak about a popular streaming audio platform Spotify and get you acquainted with the recent news of the Swedish company. What changes should we expect? What’s going on with the shares? What ambitions did the founder of Spotify share on his Twitter?

Spotify launches paid subscriptions on podcasts

On April 23rd, the Wall Street Journal that the online streaming audio service Spotify plans to start paid subscriptions on podcasts in the nearest future (some say, in a few days).

The authors of podcasts will be able to set the subscription fee and will be free from paying transaction commissions to the platform. Sounds democratic! However, some analysts say that this step was propelled by the rumors that in May, Apple is planning to introduce the same function on its streaming service.

As you remember, unlike Spotify, Apple will charge podcast-makers $19.99 as an annual fee and a 30% commission fee for sales.

Spotify and the US podcast market

According to Edison Research and Triton Digital, mentioned by the WSJ as sources, in 2021, the volume of ads in podcasts in the USA will rise over $1 billion, while the number of podcast listeners will be over 116 million people. Thanks to the pandemic and quarantine!

Spotify Technology has been investing huge sums and effort in the development of the platform for years. It’s bought such podcast resources as Gimlet Media and Ringer, it’s contracted with Joe Rogan, Michelle Obama and Barack Obama, Kim Kardashian, Prince Harry Windsor, and Meghan Markle.

Today, this Swedish streaming audio platform boasts 150 million listeners, which is 2.5 times more than Apple has, and 2.2 million podcasts, which is almost 5 times more than it had in 2019.

Spotify shares leaped up by 7%

On April 23rd, after the WSJ published its material, the share price of Spotify Technology (NYSE: SPOT) rose by 7.15%, from $265.16 to $284.11. As for the dynamics of this year, the share price has dropped by 9.7%.

Some experts say that the share price rose after the Jefferies investment company lifted the target stock price of Spotify to $360 and gave it a “buy” rating.

According to Andrew Uerkwitz, a Jefferies analyst, the Swedish online resource has a chance to become the main online audio platform of the world, and its stock price is undervalued, compared to its rivals.

Summing up

On Friday, the shares of Spotify in the NYSE grew by 7.15%. There are several possible reasons for it. Firstly, the WSJ published an article saying that the popular Swedish online streaming platform was launching paid podcast subscriptions and provided quite profitable and flexible conditions to podcast makers.

Secondly, the Jefferies investment company raised the target price of these shares and changed their status to “buy”. Thirdly, Daniel Ek, the CEO and founder of the streaming service, wrote on his Twitter that he was ready to buy the Arsenal football club, estimated by Forbes as $2.8 billion.

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