Spotify Fails To Live Up To IPO Hype As Consumers Ditch Premium Sound
Tipped as a winner shortly after their IPO earlier this year Spotify is now struggling as Australian are lured to music steaming by Apple, Amazon and Google with their new YouTube linked content service.
Last night Pivotal Research Group in the USA has issued a downgrade to the stock’s performance, citing competition from Apple Music and other streaming options. While the stock was tipped to exceed $200 it is now languishing at $187.30 and falling.
According to Pivotal Research, Spotify’s growth has slowed substantially in the face of active competitors and churn from the company’s subscribers.
A substantial number of those subscribers are opting out of premium content in favour of its free, ad-supported option, with one estimate pegging churn at 16%.
The research group also delved into Google search traffic and found that searches for the streaming platform are ebbing. That could mean that Spotify is achieving its marketing aims without Google’s help, or that the platform is already nearing its consumer saturation point.
Digital Music News claims that either way, the firm has also downgraded its projection for new subs for the fiscal 2018 period, stating that it believes SPOT will hit 92.5 million subscribers.
That’s slightly down from the original estimate of 93 million.
Analyst Richard Greenfield recently initiated a buy on the stock with a Street-high price target of $230. Spotify’s biggest bull was slow to join the game as he admitted that “waiting for a better entry point into the stock has not worked.” The platform is simply too powerful to wait any longer, he wrote in a note
Pivotal’s analyst estimate seems in line with a newer batch of projections for the company, with fierce competition among music and video streaming services viewed as a bigger deal.
A new report that looks at the composition of Spotify’s premium subscription discovered that only 55% of subscribers had the $9.99 per month subscription plan, 24% had the family plan, and 12% the cheaply-priced student option.
Apple Music achieved a 5% subscriber growth rate in the US, while SPOT’s growth was only 2% in the same period. However, the company outperformed Apple Music globally with 7% growth worldwide.