CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

It’s all about podcasts and profits with Spotify (SPOT)

By Jenal Mehta

12:12, 10 December 2021

Spotify playing on phone in woman's hand with sunset
Spotify Technology has 172 million premium subscribers – Photo: Shutter Stock

Spotify Technology’s (SPOT) strategy to move beyond music in the audio industry appears to be finally paying off.

Following five quarters of operating losses, the digital music, podcast, and video service reported positive operating income this year for the first time in more than one consecutive quarter.

The Stockholm, Sweden-based company began its strategic shift by getting involved in podcasts. In 2019, it started acquiring podcasting networks and getting involved with other big content creators in the industry, moves which helped the Spotify create an exclusive catalogue. With an announcement last month to acquire audio book studio Findaway, the market waits to see whether this is the beginning of Spotify’s second growth wave.

Turning around profits

The year began with the company reporting first quarter operating income of €14m, the first positive result since third quarter of 2019. The following two quarters saw further profits of €12m and €75m respectively.

total Spotify revenueTotal Revenue – Credit: Koyfin

The company currently has 172 million premium subscribers, up more than 19% from this time last year, while revenue for the three months ended 30 September grew 27% to €2.5bn year over year.

Despite steady growth in both revenue and subscriber count, Spotify’s operating income and thus its EBIT has been sporadic. This has largely been due to the fact that much of its income had to be paid out in royalties and music licencing. Years of making losses gave rise to Spotify grabbing onto the next phase of growth opportunity – Podcasting.

What is your sentiment on SPOT?

Vote to see Traders sentiment!
spotify total operating income Operating Income – Credit: Koyfin

Podcast and chill

Spotify has shifted its focus to content which draws more listeners and doesn’t involve licencing fees. In 2019, Spotify made its podcasting ambitions clear by acquiring Gimlet Media, Anchor and Parcast. In May 2020 news broke that comedian Joe Rogan would be taking his podcast and his millions of followers exclusively to Spotify.

In June 2020, Spotify announced an exclusive deal with Warner Bros to produce and distribute original scripted podcasts about DC comic characters. This is around the time Spotify stock started moving higher.

spotify stock price Stock Price – Credit: Koyfin

Since then podcast listeners heard many of their favourites, such as Armchair Expert with Dax Shephard and Call her Daddymake similar statements about exclusive deals with Spotify.

The expansion in these sectors has meant that more time is being spent on the app. As Spotify co-founder and chief executive Daniel Ek said in a 2019 blog post: “Our podcast users spend almost twice the time on the platform, and spend even more time listening to music.”

More time spent on the app gives Spotify more leverage to increase its ad revenues. By mid 2021, Spotify saw revenue growth from podcasting increase 627% year over year. This was followed by more positive reports. In the most recent quarter, Spotify said the number of podcasts grew by 50% since last year, resulting in a greater number of advertisers participating.

The growth coincides with industry trends. In their global entertainment and media outlook, PwC said the strategy of offering multiple types of entertainment on one platform is a common trend they have observed in the media industry, particularly podcasting. Their outlook predicts that by 2025 music and podcasting services will have the largest growth in advertising revenue compared to the rest of the sector.


2,023.31 Price
-2.270% 1D Chg, %
Long position overnight fee -0.0200%
Short position overnight fee 0.0118%
Overnight fee time 22:00 (UTC)
Spread 0.50


15,747.80 Price
-1.580% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 1.8

Oil - Crude

73.71 Price
-0.390% 1D Chg, %
Long position overnight fee -0.0200%
Short position overnight fee -0.0019%
Overnight fee time 22:00 (UTC)
Spread 0.030


41,414.85 Price
+4.240% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00

This follows a pattern of increased interest in podcast listening. Edison Research found podcast listeners in the US increased by 17% in 2021. Similar trends have been seen in the UK, Canada and among other countries.

The growing world of audiobooks

Another part of the audio industry which has shown growth potential is the audio book sector. The Association of American Press showed revenue from audio book downloads increased 14.2% in 2021 with a total of $632m total revenue. The Audiobook market is expected to have a compound annual growth rate (CAGR) of 24.4% by year 2027 as per Grand View Research.

In a continued effort to build a large catalogue of audio entertainment for its listeners, Spotify acquired audiobook leader Findaway. In the announcement, Gustav Söderström, Spotify’s Chief Research & Development Officer said: “It is Spotify’s ambition to be the destination for all things audio both for listeners and creators. The acquisition of Findaway will accelerate Spotify’s presence in the audiobook space and will help us more quickly meet that ambition.”

Spotify appears to be trying to make the most of the expected growth trajectory of audio books.

How does Spotify stack against competition?

Spotify remains the top downloaded music app as per Statista. When it comes to specifically podcasting apps, Spotify was used by 30.7% of audiences, second only to Apple with 32.8%. However Spotify’s early acquisition strategy and unmatched creator exclusivity is expected to allow them to surpass Apple by this year.

In the future, Spotify may have a hard time competing with the likes of Audible in audiobooks. Audible enjoys a reputation of having one of the best quality and variety of content and is relatively cheap. Other competitors often fall short. However, Spotify’s existing 172 million premium subscribers may help them find success more easily.

Price Prediction

There remains uncertainty behind the future performance of Spotify. This doubt is seen in the varying forecasts made by analysts:

  • Analysts at MarketBeat expect the stock price to rise by 32% in the next year, with consensus being a hold.
  • Nasdaq analyst research also predict a similar performance in the next 12 months, with the consensus being a strong buy.
  • TipRanks has the stock at a moderate buy, with 12 out or 18 analysts saying Spotify is a Buy.
  • While Walletinvestor is bearish on the stock price.

Spotify’s operating profit has only lately turned positive and the payoff from investments in podcasting is just coming into focus. The fate of Spotify appears to be dependent on the future potential of the audio industry and whether the company is able to make most of fresh opportunities.

Spotify Technology trades on the New York Stock Exchange under the ticker symbol “SPOT”. The stock closed Thursday at $233.42 per share.



Read more: Spotify eyes 400 monthly users by year-end

Markets in this article

Spotify Technology SA (Extended Hours)
194.82 USD
14.4 +7.980%

Rate this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 570.000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading