Spotify Stays Hot with Goldman PT Hike
Spotify’s string of new content deals and monetization innovation is prompting Goldman Sachs to lift its price target for shares to $280, up from $205.
Deal slinging: Exclusive deals with the Joe Rogan Experience podcast, Warner Bros. & DC Entertainment, and Kim Kardashian West will help Spotify capture a bigger share of the rapidly growing global podcast audience, according to analyst Heath Terry.
Podcast market opportunity: More than 150 million Americans have tuned in to a podcast and more than 100 million listened to one in the last month, according to a 2020 Edison Research survey.
Premium Tier: Exclusive content and high-profile personalities opens the door for Spotify to roll out a premium tier offering that could mirror that of Sirius XM, “where there is at least a $6-$12 monthly premium to the ‘Mostly Music’ tier to access news, Howard Stern, Comedy Channels, and Artist-dedicated channels, among other features,” says Terry. He says this strategy could help Spotify reverse declining average revenue per user trends, which have been impacted by family plan subscriptions.
Ad tech: Spotify technology and new products such as Spotify Podcast Ads harness the power of data to optimize advertising. Goldman sees this as a way to improve monetization in a traditionally challenging audio environment, and thus attracting more content creators.
More M&A? With podcast assets fetching high valuations, Scripps is reportedly jumping on the opportunity to offload Stitcher, its podcasting service. Wells Fargo Securities analyst Steven Cahall estimates Scripps could fetch upwards of $200 million in a deal for Stitcher. Spotify and Apple are among possible suitors.
