3 Reasons Long-Term Investors Should Hit Play on Spotify

Spotify is the world’s largest and leading audio streaming service but also a great opportunity for investors. Explore 3 reasons long-term investors should hit play on Spotify. The app’s competitive advantage, expansion strategy, and industry trends are key factors making it a fabulous buy-and-hold stock.

Spotify, with its broad range of songs, genres, podcasts, and artists, revolutionized the music industry. Along with multiple features, the app is also a good long-term and short-term investment opportunity for investors. Here we will explore 3 reasons long-term investors should hit play on Spotify. While going through these reasons, the first things that need to be considered are how Spotify has a competitive advantage over other music streaming services like apple music, amazon music, youtube music, and so on. Also, we have to examine how the app’s superior technology, content, and user engagement are putting it on edge as well as how Spotify is increasing and diversifying its revenue and what strategies are being applied to increase its user base.

Along with these, we have to explore how Spotify is getting the desired outcome using favorable industry trends and consumer habits, such as the shift to digital media, the rise of smart speakers, and the demand for personalized content. So let’s dive into 3 reasons long-term investors should hit play on Spotify to get detailed information.

Explore The Contents

How Spotify Has A Competitive Advantage Over Its Rivals

The first reason of the “3 reasons long-term investors should hit play on Spotify” is the competitive advantage of Spotify. The leading music streaming service has the edge over its competitors, but as of 2023, this competition getting at its peak, and Spotify is the winner, but how? Let’s explore:

Spotify has 515 million monthly active users and 210 million premium subscribers as of Q1 2023, making it the biggest streaming service by market share.

Spotify has a diverse and personalized music catalog with over 70 million songs and 2.6 million podcasts, as well as exclusive deals with popular artists and podcasters such as Taylor Swift, Joe Rogan, and Barack Obama.

Spotify has a strong global presence with operations in 178 markets and 96 languages, as well as partnerships with local platforms such as JioSaavn in India, Tencent Music in China, and Deezer in Africa.

Spotify has a robust technology platform that leverages artificial intelligence, machine learning, and big data to deliver customized recommendations, playlists, and features to its users, such as Spotify Wrapped, Discover Weekly, and Spotify Greenroom.

Spotify has a sustainable business model that generates revenue from both advertising and subscriptions, with a gross margin of 25.2% and an operating loss of €156 million in Q1 2023, showing improved profitability and efficiency compared to previous years.

How Spotify Is Expanding Its Reach and Revenue Streams Beyond Music

The second reason for “3 reasons long-term investors should hit play on Spotify” is that Spotify is expanding its reach and revenue streams beyond music, but what are the ways using which is Spotify expanding its reach and revenue? Let’s explore:

Spotify has acquired Findaway, an audiobook company, to diversify its audio content and compete with platforms such as Audible and Scribd.

Spotify has launched Spotify Greenroom, a live audio app that allows users to join or host live conversations on various topics, such as sports, music, culture, and entertainment.

Spotify has invested in original and exclusive podcasts, such as The Michelle Obama Podcast, The Joe Rogan Experience, and Renegades: Born in the USA, to attract and retain listeners and advertisers.

Spotify has partnered with local platforms in emerging markets, such as JioSaavn in India, Tencent Music in China, and Deezer in Africa, to expand its global presence and reach new audiences.

Spotify has leveraged its data and technology to create personalized recommendations, playlists, and features for its users, such as Spotify Wrapped, Discover Weekly, and Daily Mixes.

How Spotify Is Benefiting From Favorable Industry Trends and Consumer Habits

The third reason for “3 reasons long-term investors should hit play on Spotify” is that Spotify is benefiting from favorable industry trends and consumer habits in 2023. want to know more? Let’s explore:

Spotify Metaverse

Spotify is tapping into the growing demand for immersive experiences and the rise of the metaverse, where users can interact with digital content and each other in virtual worlds. Spotify has created its own metaverse platform, Spotify Horizon, where users can listen to music, podcasts, and live events with their friends and favorite creators.

Spotify Personalization

Spotify is catering to the increasing preference for personalization and the need for control over digital consumption, where users want to have more choice and agency over what they listen to and how they listen to it. Spotify has enhanced its recommendation algorithms and user interfaces to deliver customized playlists, features, and suggestions to its users, such as Spotify Blend, Spotify Mixes, and Spotify Only You.

Spotify Green Program

Spotify is addressing the rising awareness of environmental issues and the desire for sustainable consumption, where users want to reduce their impact on the planet and support green initiatives. Spotify has launched its Spotify Green program, where users can track their carbon footprint from streaming, offset their emissions by donating to environmental causes, and access curated playlists and podcasts on climate change and sustainability.

Spotify Lite App

Spotify is responding to the changing economic conditions and the need for budget-friendly options, where users want to save money and get value for their money in a volatile economy. Spotify has introduced its Spotify Lite app, where users can stream music with fewer data usage, storage space, and battery drain, as well as its Spotify Flex plan, where users can pay per day, week, or month depending on their usage.

Frequently Asked Questions

You should buy Spotify if you believe in its long-term growth potential and competitive advantage in the music streaming industry. Spotify has a loyal and growing user base, a diverse and personalized audio content portfolio, a strong global presence, and a robust technology platform.

Yes, you can invest in Spotify by buying its shares on the New York Stock Exchange (NYSE) under the ticker symbol SPOT. You can also invest in Spotify indirectly by buying exchange-traded funds (ETFs) that hold Spotify shares, such as the Invesco QQQ Trust (QQQ), the Vanguard Communication Services ETF (VOX), or the Global X Cloud Computing ETF (CLOU).

According to analysts’ estimates, Spotify is expected to report a loss of €0.70 per share on revenue of €3.46 billion for the second quarter of 2023. For the full year of 2023, Spotify is expected to report a loss of €2.63 per share on revenue of €14.34 billion.

According to analysts’ ratings, Spotify is a buy with an average price target of $149.92, which implies a 0.33% upside from its current price of $149.43 as of May 19, 2023, out of 25 analysts covering Spotify, 15 rates it as a buy, eight rates it as a hold, and two rates it as a sell.

Spotify is special because it is the world’s largest music streaming service that offers users access to millions of songs and podcasts across various genres and moods. Spotify also provides users with personalized recommendations, playlists, and features based on their listening habits and preferences.

Spotify’s investors include institutional investors, such as mutual funds, hedge funds, pension funds, and sovereign wealth funds, as well as individual investors who buy its shares on the stock market. Some of Spotify’s largest institutional investors are Baillie Gifford & Co., Morgan Stanley Investment Management Inc., The Vanguard Group Inc., BlackRock Inc., and T. Rowe Price Associates Inc.

Spotify has about 193.42 million shares outstanding as of May 19, 2023. The number of investors who own Spotify shares is not publicly disclosed, but it can be estimated by dividing the number of shares outstanding by the average number of shares held by each investor. Assuming an average holding of 1,000 shares per investor, Spotify would have about 193,420 investors.

Final Analysis

3 reasons long-term investors should hit play on Spotify, but which one? The first one is Spotify has a loyal and growing user base that generates recurring revenue from both subscriptions and advertising. The second reason is Spotify has a diverse and personalized audio content portfolio that includes music, podcasts, audiobooks, and live events. And the third reason is Spotify has a strong global presence and a robust technology platform that leverages artificial intelligence, machine learning, and big data.