Spotify’s shares took a hit after its rating was downgraded by Citi analysts because its podcasting venture has not shown any material benefit so far after the company invested more than $800 million in podcast content.
Spotify stock closed down 6.6% on Friday to record 319.82 per share, but during 2020 the company’s stock more than doubled in value due to investor enthusiasm about Spotify’s global expansion and business model, including its entry into the podcast space.
The company now has a market value of more than $60 billion, but is still reporting operating losses, and a team of Citi analysts led by Jason Bazinet changed Spotify’s stock valuation from “neutral” to “sell.”.
At the same time, Apple executives are discussing the possibility of offering subscription services to podcasts, but it doesn’t seem like it would pose a greater threat to Spotify competition than the prior threat posed by Apple Music.
According to statistics, by the end of last September, Spotify had more than 320 million users, including 144 million paid subscribers in 92 international markets, and the company hosts more than 1.9 million podcasts, most of which are non-exclusive.
Spotify gained initial growth for its podcast services in early 2019 after it bought podcast studios Gimlet Media, Parcast and Anchor for a total value of nearly $400 million.
The company has the potential to make further acquisitions over the next four years, as it bought Bill Simmons’ The Ringer podcaster and a media startup in a deal worth nearly 200 million, as well as paying $235 million in cash to buy podcasting and advertising platform Megaphone.