Spotify‘s (NYSE:SPOT) business hasn’t skipped a beat amid the COVID-19 pandemic. Its stock price has more than doubled year to date as investors catch on to how meaningfully its podcast investments could pay off over time.
Let’s recap 2020, dive into what’s to come, and then determine whether the stock is still a buy.
Spotify has had a phenomenal year despite the pandemic. The company’s total monthly active users (MAUs) were 29% higher at the end of September versus the prior-year quarter, and the midpoint of management’s fourth-quarter guidance suggests more than 26% MAU growth for the year. Within that figure, management expects Premium subscribers to grow 23%.
One of the big stories of the past year has been the company’s massive push into podcasting, specifically original and exclusive podcast content. This push began in earnest when Spotify spent 357 million euros ($436 million) to acquire the podcasting businesses Gimlet, Anchor, and Parcast in 2019.
But Spotify took that to another level this year with the acquisition of The Ringer, a podcast and media company started by Bill Simmons. It later signed Joe Rogan’s wildly popular program The Joe Rogan Experience to a multiyear deal that went exclusive with Spotify earlier this month. Kim Kardashian West and Michelle Obama were two other huge names that joined the platform in exclusive deals.
This hasn’t gone unnoticed by podcast listeners. In 2020, Spotify has overtaken Apple as the most widely-used podcasting platform, according to MIDiA Research. This rapid success has undoubtedly contributed to increasing investor enthusiasm toward the stock.
What’s to come
As we look forward to next year, we can probably count on more of the same out of Spotify. That should mean continued MAU and Premium subscriber growth as streaming audio adoption continues in the company’s 92 existing markets — and the service launches in new ones.
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