Spotify Techis celebrating thanks to surpassed 500 million monthly active users or MAUs. In addition, the firm revealed key changes in its user interface in his second event Stream On. With all this, the analysts turned towards a optimistic vision about the technology company according to Alexandra Canal en Yahoo Finance.
He analyst de Truist, Matthew Thorntonwho kept his buy rating and price target for the stock at $132, wrote in a note to clients on Thursday that the rise in MAUs made the news “grande incremental” for investors.
Spotify had previously guided 500 million MAUs for the first quarter after reporting 489 million MAUs in the fourth quarter.
Along with user growth metrics, Spotify also introduced a new mobile interface which “gives listeners a more active role in the process of audio discovery and provides creators more space to share your work“.
Like TikTok y YouTube ShortsSpotify users will be able to scroll endlessly through video content that recommends certain artists, podcasts, and audiobooks. However the CEO of Spotify, Daniel Ekemphasized that the changes They are not intended to imitate other platforms, but to improve their own.
“I don’t want people to think that we’re making this like TikTok,” Ek said in an interview with CBS on Thursday. “We’re making it a much more interactive Spotify.”
The effort was worth itfrom the sorrow
The news comes as the company seeks leverage your heavy investments in podcastswhich have been a significant drag on margins and profitability.
To date, Spotify has spent a billion dollars in the podcast markethiring celebrities like the Obama, Prince Harry and a Kardashian. The company paid $230 million to acquire podcast studio Gimlet in 2019. spotify later paid $200 million to bring Joe Rogan exclusively to the platformand others $200 million for The Ringer in 2020.
He Spotify CFO Paul Vogelsaid during the company’s investor day that the platform will seek improve their rates of return from 2023 on the basis of gross margin and operating incomecategorizing 2022 as a “maximum investment year”. Earlier this year, the company announced a reorganization focused on “efficiency” and laid off 6% of its workforce.
Analysts seem encouraged by the updates with the JPMorgan analyst Doug Anmuth writing in a note published on Wednesday: “We continue to believe that Sotify is no longer passed the peak of investments in podcasts on content and creation platforms/tools, and should increasingly reap the benefits of investments with podcasts when it becomes profitable in late 2023 or 2024 and the market contribution increases.”
The analyst, who kept his outperform rating and his $135 price targethe said it is “optimistic” regarding the strategy of the platform and explained that his positive vision is driven by three main catalysts:
1) Spotify could have 635 million users, including 277 million Premium subscribers, by 2025; 2) Spotify has a freemium model differentiated at scale and is increasing paid subscriptions; and 3) the investments in podcasts and Two-Sided Marketplace have the potential to drive margin leverage and long-term commitment.
Anmuth also predicted that the price increases are on the horizon after recent increases in both Apple Music como en YouTube Premium: “It is likely that there will be a price increase on the Individual plan in the US in the coming months, which we estimate could drive €200 million in incremental annual revenue“.
You have to live in the future
Spotify rated the review of its home feed and search experience as “our biggest evolution so far”and noted that the The rollout will take place in stages over the coming weeks and months.
“We discovered that the next generation of listeners yearns best ways to test audio before fully submerging,” the company said in a blog post. “So be prepared for a more active experience with advanced recommendations, a focus on visual canvases, and a completely new, interactive design, all to make discovering new audio easier than ever and help introduce users to their next favorite artist, podcast, or event.”
In addition, the company provided more details about your AI-powered DJ, that selects song recommendations for premium users, in addition to Smart Shufflewhich makes custom suggestions for user-generated playlists.
“You have to live in the future and for me, the future is always the young. What are they doing in various cultures?” stressed ek. “Every few years in the industry, someone comes out with something from a design perspective that’s just a much, much better way for people to interact with it.”
The redesigned app experience includes custom subfeeds for music, podcasts and shows, and audiobooks. Users can then save, download, or share recommendations, play from the beginning, or explore even more related audio.
JPM’s Anmuth said the changes pbetter position Spotify’s place in the global audio market and “ultimately, they should strengthen user acquisition, engagement, and retention.”
He Raymond James analyst Andrew Marokadded in a note on Thursday that the ads “show how Spotify is leveraging your listener data and AI capabilities to give creators the widest possible audience across all Spotify audio modalities.”
“While it likely won’t bring immediate financial gains, we think Wednesday’s announcements will make the platform an even more attractive place for creators, and could provide more ammunition for the company in negotiations with record labels in terms of added value,” added Marok.
Marok kept his Outperform rating and his $130 price target per share.
Spotify Techit closed on Friday at $121.73 and the small crossing of the 70-period moving average above the 200-period moving average would give us a bullish signal. Meanwhile, Ei indicators are mostly bullish.
