Spotify stock fell almost 30% in 2021 – what’s going on?
Despite adding almost 4% to its value during today’s trading hours, Spotify (SPOT) stock has now fallen around 26.5% since the start of 2021.
Spotify (SPOT) stock was worth $ 228.68 per share at market close today – an increase of 3.79% ($ 8.35) on the day. However, the Stockholm-based audio entertainment platform, which appears to be gearing up for a hi-fi tier rollout, was posting a share price of around $ 311 in early January.
This massive valuation was more than double the Spotify share price in January 2020 (when shares were around $ 150 each) and, equally noticeable, paled from the nearly $ 400 per share value that the company hit in February. 2021.
Nonetheless, the entity’s stock value per share fell to $ 300 at the end of February, before remaining broadly stable in the $ 250-300 range in March and April and dropping in the first three weeks of may.
As might be expected, many financial professionals and investors are speculating on the precise source of the Spotify stock decline, which has caused stocks to fall to a level not seen since June 2020.
On this front, it bears repeating once again that Spotify shares were trading at around $ 150 each at the start of 2020 – a substantial improvement from October 2019, when SPOT fell to around $ 115. Additionally, the upward climb that led to several record highs for Spotify shares appeared to have really kicked in a year ago, when the company announced it would become the exclusive home of The Joe Rogan Experience.
Some analysts went on to set bullish SPOT target prices, touting the perceived earning potential associated with not only JRE, but podcasting in general – and expressing hope that non-musical audio entertainment would allow Spotify to exceed its slim musical margins. like a razor and tap into a new source of income.
By the way, Spotify reportedly paid $ 100 million for the rights to JRE and also hosts (no doubt expensive) podcasts from Michelle Obama as well as Barack Obama and Bruce Springsteen, to name a few. Additionally, the entity paid $ 235 million for Megaphone last November, $ 250 million for The Ringer in February 2020 and $ 230 million for Gimlet Media in 2019.
With these points in mind, the Spotify share price surge began long before JRE even hit the service – and, in turn, long before the specifics of revenue and audience. podcasting does become clear.
But in one possible explanation for the drop in SPOT, Spotify revealed in its Q1 2021 earnings report that only a quarter of MAUs had engaged – not necessarily listened to from start to finish – podcasts throughout the years. first three months of this year. In addition, the figure remained stable from the fourth quarter of 2020.
Developing the idea, SPOT, despite noticeable losses so far in 2021, is still worth around $ 36 more than it was on May 21, 2020.
Finally, Spotify, after achieving significant growth in subscriber numbers in 2020, noted in its analysis of Q1 2021 performance that it only added three million paying users – even after making its debut. in South Korea (52 million inhabitants) without free level and spread to a multitude of other nations as well.
The subscription plateau (as well as the potential implications for future operations) can contribute to the difficulties of SPOT. In this regard, it will be particularly interesting to see how many MAUs and subscribers the platform manages to attract in the second quarter of 2021 – and the percentage of MAUs that engage with podcasts.