Spotify Shares Took a Nose Dive After Amazon Did This

Shares of Spotify were in the red on Monday after Wall Street learned that Amazon had expanded its free music service.

The stock fell 4.9% on Amazon’s announcement that its free music service will now be available on even more devices.
The e-commerce giant’s ad-supported service is now on the iPhone, Android devices and Fire TV. It was previously only available on Amazon Echo.

The free music tier consists of playlists and radio stations akin to Pandora.

It was last month that Spotify had announced a third quarter profit and that the number of premium subscribers rose 26 million in the past year to 113 million people at the end of September.

Spotify now has 248 million monthly active users, including people who don’t pay for premium subscriptions. According to the company’s forecast, that number would grow to between 255 million and 270 million in the fourth quarter.

To shareholders the company wrote, “The business met or exceeded our expectations in 3Q19, with accelerating MAU growth, and better than expected (1) Subscriber growth, (2) Gross Margins, and (3) Operating Profit. For the 8th consecutive quarter, free cash flow was positive. We continue to see exponential growth in podcast hours streamed (up approximately 39% Q/Q) and early indications that podcast engagement is driving a virtuous cycle of increased overall engagement and significantly increased conversion of free to paid users. The correlations in our data sets are clearly apparent. We are working to prove causality. Overall, the business is performing strongly.”
Disclaimer: We have no position in Spotify Technology SA (NYSE: SPOT) and have not been compensated for this article.