Despite the onset of stiff competition and a fluctuating stock market, Spotify Technology S.A. (NYSE: SPOT), the world’s most popular audio streaming platform, continues to demonstrate the potential to reach all-time highs. Specifically, it will explore whether Spotify has the capacity to smash its all-time high of $387.44.
One cannot discount the impact of the ongoing pandemic and the shift in consumer behaviour that came with it. Physical distancing norms and stay-at-home directives across countries have seen a significant rise in the consumption of digital content, including music, podcasts, and audiobooks, thereby favoring the likes of Spotify.
Known for its diversified portfolio, Spotify understands the core of consumer needs and preferences. It offers over 70 million tracks across different genres and a choice of around 2.2 million podcasts. The well-balanced content mix offers greater appeal, which is likely to contribute towards increasing subscriber count.
Spotify’s success is indeed recognizable in its impressive subscribers list. As of the first quarter of 2021, it has a colossal base of 158 million premium subscribers, topping analysts’ estimates. This number beats its closest competitor, Apple Music, which has around 72 million subscribers. Furthermore, Spotify predicts its total premium subscribers to reach between 162-166 million in the next quarter, which could lead to increased revenue and possibly, a boost in share price.
Its underlying key growth strategies, including expansion in the podcast industry and investments in innovative technology, provide a competitive edge. With its unique model of both ad-supported and subscription-based services, Spotify exhibits resilience against market uncertainties. Continual growth in average revenue per user (ARPU), a key performance indicator, is a promising sign that the music-streaming giant can reach or even surpass its previous all-time high.
Long-term deals with music labels and podcast producers significantly reduces risk, securing a continued stream of content. Moreover, Spotify’s acquisition of Megaphone, an ad-insertion technology that monetizes podcasts, has not only augmented its podcast strategy but also created new revenue streams, solidifying its financial outlook.
However, one must also consider potential challenges. Increased competition from Amazon Music, Apple Music, and newcomer services like ByteDance-backed Resso, may pressure Spotify’s market share. Additionally, the company’s aggressive global expansion strategy, while opening up countless new opportunities, also exposes it to significant risks from different economic, political, and regulatory environments.
In conclusion, while there are risks involved, analysts are cautiously optimistic about Spotify’s growth prospects. With its strategic acquisitions, robust financial health, and a continually growing subscriber base, there exist sufficient indicators that Spotify could smash its all-time stock price high of $387.44. However, as with all investments, potential investors should conduct their due diligence and consider the risks before making any investment decisions.
