Audio streaming

Should you invest in Spotify in 2021?

Spotify is looking bullish — here is the due diligence on its current competitive position and growth prospects

Spotify has just posted their Q4 2020 earnings and shareholder letter (AR pending) and the share price has dropped by 8.5% between market close 2nd — 3rd February 2021. I believe this is a great opportunity to buy shares at a discounted price, and here’s why:

Photo by Amelia Holowaty Krales / The Verge

INDUSTRY TRENDS

• Millennials, a key target demographic of the industry, are increasingly looking for access, rather than ownership of goods and services (Citation 1) which suits the industry model
• The global music streaming industry is expected to grow at a CAGR of 17.8% between 2020–2027 (Citation 2)
• Global CAGR between 2020–2027 in the podcast industry is estimated to be 27.5% (Citation 3)

INDUSTRY UNCERTAINTIES

1. Will trends stick after Covid19? To what extent will growth slow down post-Covid?
2. Will content creators demand more royalties in the future due to perceived unfairness of payment?
3. Will competitors move to develop in-house content creating capabilities?