There is certainly some risk in the short term due to current world events. The highest forecast is 124%, whereas the lowest projection of 10% is still comfortably above the current inflation rate.ĭue to the reasons I’ve discussed above, I believe that SPOT is undoubtedly a buy. According to Alphaspread, Wall Street professionals forecast an average of 75% upside for the stock in 12 months. Since most the issues that have plagued Spotify are reversing, the stock is also likely to do the same. Of course, with 406 million active users, there is still a lot more room left to grow. If Spotify works to keep the current growth rates consistent, the profits are likely to increase many times in a few years. However, Spotify may have reversed that too, as the company is expected to be profitable this year.
#Spotify stock. trial#
The current ARPU might not be the best, but Spotify can certainly improve it over the years through trial and error.įor Spotify, most problems are still revenue related, and they can certainly be solved.Īs an example, the story of SPOT stock was seen as bearish due to its losses. Spotify reaching its aforementioned goal of 1 billion users would probably make it a tech giant. The long-term prospects for Spotify remain quite high, as it is basically becoming the go-to platform for streaming music and podcasts. The Long-term Prospects for Spotify Stock Moreover, as podcasting booms, Spotify’s ARPU is likely to pick up even more growth in the coming years. However, the trend may now have been reversed, and with an increasing ARPU, investors will find it more worthwhile to invest in SPOT. Spotify’s decreasing ARPU was one of the most significant factors behind previous selloffs. In short, Spotify’s premium users generate half the revenue of what Facebook’s regular users do. Meta’s ARPU is more than double at $11.57 worldwide, and a staggering $60.57 for users in the U.S and Canada. However, as I’ve mentioned before, it is still inadequate compared to other tech platforms. Fortunately, Spotify has managed to reverse that trend this quarter, and ARPU has increased to $5.03. In the last quarter, Spotify’s ARPU for premium declined to $4.98. Spotify’s ARPU has also consistently decreased for the past few years. However, even Spotify’s premium users do not generate anything close to what platforms such as Meta’s (NASDAQ: FB) Facebook generates. Paying users are certainly more profitable for Spotify than those who use the platform for free. The critical metric for Spotify is its average revenue per user (ARPU), which is still poor. Spotify Stock’s Performance Relies on This Key Metric
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