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Spotify expands its AI DJ feature to 50 more markets globally.
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However, a vast majority of European countries won’t access the feature yet.
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Additionally, the feature is still in beta version and will only be available to premium subscribers in the new markets.
Spotify expands its AI-powered DJ feature globally | TechCrunch
Spotify - InvestmentWiki
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According to Bloomberg, White noise and ambient podcasts accounted for 3 million daily consumption hours on Spotify as of January.
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Spotify considered pulling them out of its talk feeds, banning future uploads and sending users to other economical content; a plan that could increase its annual gross profit by €35 million($38 million).
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Spotify said that the plan to prevent them from showing in talk feeds did not materialize, but some white noise podcasts creators have seen them go missing.
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- Wells Fargo reiterated its buy rating on Spotify.
- The firm cited positive setup for Spotify’s Q3 earnings results and Q4 margin guidance.
- It also said that the expected new deals updates and changing royalties are seen as favorable.
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- As part of Spotify’s crackdown on white-noise podcasts, effective October 1, white noise podcasters will no longer be eligible for Ambassadar Ads Program.
- Under the program, Spotify pays podcasters to read ads in order to encourage others to make content and join the program.
- Last week, Spotify said it plans to invite more podcasters to take part in automated adds and that revenue from these ads will be divided in half between the company and podcasters as opposed to the flat rate based on ad impressions that was originally used.
https://www.bnnbloomberg.ca/spotify-to-limit-white-noise-podcasters-money-making-options-1.1966291
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- Truist raised Spotify’s price target to $176 from $165 and maintained buy rating on it.
- The company said that Spotify’s app downloads are tracking well into September.
- Its analyst also said the consensus estimates such as gross margin, operating income, monthly active user, and subscriber numbers are very reasonable.
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Do you know if there is a way to track those downloads?
There are paid sites that track it eg 42matters, sensor tower and apptopia. Haven’t found free site yet
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- Spotify plans to offer its premium customers free audiobooks for a limited time as part of a test to gauge user interest, that’s according to the Wall Street Journal.
- Subcribers will be able to listen to up to 20 hours of free audiobooks a month.
- A number of compensation models for the publishers have been discussed, including payment based on the number of hours a user spend on the audiobooks.
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Monness, Crespi, Hardt lowered Spotify’s rating to “neutral” from “buy” due to a downturn potential.
“Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, expanding its audio offerings, and improving its cost structure; however, competition is fierce, margins thin, and we believe the darkest days of this downturn are ahead of us,” Analyst Brian White wrote.
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White added that the upcoming price hikes could be negative to the consumers, and thus, the company.
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White expects Spotify’s third-quarter revenue to grow by 9% y/y to €3.32B, slightly below analyst’s estimate of €3.334B.
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He expects its monthly active users to grow 26% to 574M.
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- Morgan Stanley increased Spotify’s price target to $190 from $185, maintained its buy rating and uplifted it to Top Pick.
- Analyst Benjamin Swinburne said Spotify’s growing user engagement and continued product developments will its market share and pricing power.
- He also sees an “increasingly rational competitive environment.”
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- Guggenheim raised Spotify price target to $175 from $160 and maintained buy rating on the stock.
- Analyst Michael Morris said third-party data indicates premium subscribers in the third-quarter are likely in-line or ahead of the 4 million net adds guided by the management.
- The analyst sees sustained pricing power and cost discipline in an “under-appreciated” economic cycle.
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- TD Cowen initiated coverage of Spotify with a price target of 129 euros and neutral rating.
- TD Cowen expects the company to continue delivering double-digit revenue growth rate and margin growth over time, but this is already factored in its current stock valuations.
- The company added that Spotify remains in a “somewhat challenging competitive situation” brought by the likes of Apple, Google and Amason.
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- Benchmark lowered Spotify’s price target from $205.00 to $195.00 but maintained its buy rating.
- Analyst Mark Zgutowicz does not expect any surprises in gross margins for Q3 or Q4 compared to consensus estimates.
- He stated that his conversations with investors in recent weeks established that gross margins is the most important issue.
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- Spotify said it will start to phase out its services in Uruguay in January 1, 2024 and fully cease it by February due to changes in government policy.
- Recently, the government of Uruguay passed a bill that would make Spotify pay artists twice what it pays at the moment (70% of revenue generated from content).
- Spotify said it will move premium subscribers to a Free account at the end of December.
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Buy->neutral, $190: Citi analyst Jason Bazinet likes Spotify’s exucution and strategy but he’s no longer compelled the stock’s risk/reward.
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Spotify said it will reduce its workforce by about 17% amid economic growth slowdown.
“Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.” CEO Daniel EK said in a statement. “We debated making smaller reductions throughout 2024 and 2025. Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives.”
“Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact,” he pointed out.
Assessment
At the end of Q3 2023, Spotify had 9,241 full-time employees. That means a layoff of 17% would mean around 1,570 employees.
Based on announced severance payments, previous layoff data and indications that more junior roles are affected, we estimate that this reduction would probably lead to a cost-savings of around 250-300 Million in our slightly conservative base senario. We feel confident that cost savings are at least 200million and would not substantially be higher than 350million.
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Overweight, $205->$220: JP Morgan analyst welcomed the headcount reduction and estimated that the headcount reduction will lead to annual cost-savings of around €350 million.
“Assuming an average salary of ~225k/employee, we estimate the reductions could drive ~€350M annualized savings, the bulk of which may drop down to profit, though we still expect SPOT to lean into growth investments.”
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Citi analyst Jason Bazinet who recently downgraded Spotify thinks the company is done with cost cuts while adding that so much of its cost comes from fees paid to content creators.
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Wells Fargo analyst Steve Cahall also welcomed the workforce reduction while also pointing out that this is probably the last layoff.
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