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

Jiten Chablani
6 min readFeb 3, 2021

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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:

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?

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Jiten Chablani
Jiten Chablani

Written by Jiten Chablani

Strategy @ BT Group. I explore economics, innovation and growth strategy in the tech industry. Views are my own.

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