Spotify’s Stock Flirts With Another All-Time Low Amidst Broader Market Turbulence

Spotify (SPOT) slid back into the 120s on Tuesday amidst a broader market downturn and softened price targets.

Spotify’s ‘disruptive public offering’ is now facing renewed turbulence amidst broader market malaise.  While Britain careens towards the Brexit cliff, US markets are displaying uneasiness over Chinese tensions and a possible government shutdown.

None of that is helping Spotify’s valuation on Wall Street.

Just last month, a raft of once-bullish analysts softened their price targets on Spotify.  That was largely a response to serious market headwinds, though underlying concerns with Spotify’s cashflow and financial sustainability are also playing into the pricing downgrades.

On one hand, markets love the possibility of Spotify building the next ‘Netflix for music’.  But Spotify has a lot of challenges that Netflix doesn’t face, including extremely stiff competition from Apple and an arguably more difficult licensing terrain.

In late November, shares of Spotify (SPOT) briefly slipped to an all-time low of $120, though most investment firms — including Goldman Sachs, Barclays, Wells Fargo, and JPMorgan Chase — have maintained ‘buy’ ratings on the stock despite softening their price targets.

At press time, shares of SPOT were slipping towards the mid-120s, and flirting with recent lows.

Separately, bearish voices continue to predict a broader market downturn in 2019, with Spotify likely to get beaten up by bigger trends.

The performance is a far cry from Spotify’s once-searing valuation, which included a near-$199 price in July.  According to some quick math, Spotify has lost nearly $12 billion in market cap since the peak, though major labels Sony Music Entertainment and Warner Music Group smartly pulled out before the plunge.

That shows continued savvy on the major label side as it relates to streaming, with shrewd licensing moves now complemented by some stellar market timing.

Meanwhile, the terrain is extremely foreboding for Spotify imitator Tencent Music, which is now hurtling towards a very risky IPO.  The Chinese mega-streamer is hoping for some benevolent IPO timing, though a December offering coupled with serious turbulence makes the situation look dicey.




2 Responses

  1. Remi Swierczek

    Myspace of music business will materialize very soon!

    AppleMusic, TIDAL and hand full more of music NERDS intoxicated with Ek’s “proven business model” will pulverize $300B of music business obvious to BORAT to we hope $10B of subs in 2018!
    In March IFPI will give us full report from Google guarded music streaming and advertising CONCENTRATION CAMP.
    $20B of music COMOST will generate multiple orgasms in music media, at the labels and organizations like RIAA or IFPI – the fact is that 1999 CD’s are worth today $60B and music industry in era of internet is worth $300B per annum to COMPLETE IMBECILE.

  2. Remi Swierczek

    To see ABSURD OF GLOBAL MUSIC INDUSTRY we can compare IFPI certified $17.3B in global revenues in 2017 to $23B made by McDonald on hamburgers in the same year! VERY DISTASTEFUL SITUATION.