Spotify Stock Downgraded by Raymond James as Quarantine Listening Shrinks

Spotify Unveils Publishing Analytics Platform
  • Save

Investment banking company Raymond James has downgraded its rating of Spotify (SPOT) stock, due in large part to music streaming’s popularity decline amid the COVID-19 coronavirus pandemic.

Raymond James analyst Justin Patterson officially lowered the music streaming giant’s stock rating from “Strong Buy” to “Market Perform.” In his report, James indicated that widespread lockdowns, stay-at-home orders, and non-essential business closures are negatively affecting music streaming’s prevalence; many music fans had previously streamed tracks at the gym, in the car, and at work, for instance.

Additionally, the Raymond James analyst stated that Spotify music streaming rates have recently dropped by double digits in the United States and other countries, and that podcasts are also receiving less attention than they did prior to the coronavirus crisis. Album and touring delays will not help matters for Spotify, Patterson noted.

Likewise, the report emphasized that some Spotify users could switch to Amazon Music because they’re relying on smart speakers like Amazon Alexa for at-home music streaming.

Spotify’s per-share stock price has fallen (as has the overall market, of course), but most of its pre-coronavirus value has remained intact.

This point is particularly important because the Stockholm-based company’s value surged during the final quarter of 2019, from approximately $113 per share in October to about $155 per share in November. This price dropped considerably in mid-March, but is currently hovering around $127 per share.

Spotify executives are scheduled to deliver a financial report for 2020’s first quarter on the morning of April 29th. During the corresponding earnings call, higher-ups will answer investors’ questions; inquiries can be submitted on Slido using the #SpotifyEarnings code.

While the Dow Jones Industrial Average and the Nasdaq Composite haven’t yet returned to their pre-coronavirus levels, they have posted solid gains in recent days, presumably because of the United States’ $2.2 trillion stimulus package and relatively encouraging signs from the coronavirus battle.

In terms of the latter, Centers for Disease Control (CDC) Director Robert Redfield stated today, during a radio interview, that widespread compliance with social-distancing recommendations will likely result in far fewer COVID-19 casualties than originally anticipated.