Spotify investors this week began to understand why it will be the audio power house for decades to come. Off the heels of the Joe Rogan Experience licensing deal Spotify stock is up ~30%. This equates to an equivalent equity value worth about $10 billion dollars in market cap.
Additionally, the new world realities of COVID-19 causes investors to value companies higher that thrive in a remote-first environment. Subsequently, seeing Spotify stock up so much in a short period of time signals a paradigm shift in the viability of the business model from capital allocators.
Likewise, the JRE deal was the first major domino to fall for Spotify in acquiring talent in the upcoming years. Spotify has the technology to support everything a music, podcast, or video creator could need when expanding their brand.
Spotify’s Stock Future
Spotify’s stock is attempting to surpass its previous all-time highs post-IPO. The company has never been as well set as it is currently. Historically low interest rates and constant cash flow from monthly subscriptions have left Spotify as well capitalized as ever in its history.
Meanwhile, the new found increase in share value should result in increased spending in R&D, content creation, and creator partnering. Spotify will emerge as an omnipresent audio conglomerate as present as Youtube this decade.
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Oddly Observant Conclusion
Spotify had a generational moment yesterday; investors recognize the consumer behavior monetization that Spotify was aware of all along. Spotify will morph into a Netflix like audio conglomerate that is the staple infrastructure for audio globally. Daniel Ek will without a doubt use new additional wealth to propel Spotify into audio dominance for years to come. The stock will likely pass all time highs.
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