Analysts warn: Spotify may have bet on the wrong strategy

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Citigroup analysts have doubts about Spotify’s expansion of its in-house podcast program. CNBC reported on Friday with reference to a customer announcement from the financial services provider. The reason given by the research team was the lack of improvements in premium subscriptions and app downloads in the second half of 2020.

The analysts therefore downgraded the shares of the Swedish company from “neutral” to “sell”. As a result, the price on Friday fell above average by 6.6 percent. According to CNBC, the customer announcement went on to say that they would be quite ready to change the rating if any substantial positive effect of the podcast investment could be seen. However, there are fears that the in-house productions may not be sufficient to free the streaming service from its dependence on music labels – which could negatively affect the fundamental assessment of the company’s value on Wall Street.

Spotify shares more than doubled in price in 2020

Spotify had already started to enter the podcast business more strongly at the beginning of 2019, and in the course of this took over the podcast providers Gimblet, Parcast and Anchor. The streaming service paid nearly $ 400 million for this. Further investments in the millions went into the takeover of the sports and pop culture website The Ringer and the podcast advertising company Megaphone.

In the past two years, the company has also secured several exclusive rights to podcasts from stars such as Michelle Obama, Kim Kardashian West and, most recently, Prince Harry and Meghan Markle. Both the advertising business and the number of premium subscribers were to be increased through exclusive content. Spotify shares then rose 31.76 percent in 2019 and 110.4 percent in 2020.


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