Spotify (SPOT)

History of the Company

Spotify is a music streaming company founded in 2006 in Stockholm, Sweden, by Daniel Ek and Martin Lorentzon. Ek is the company’s current CEO. One of the original streaming platforms, Spotify helped pioneer “freemium” music sharing. This business model uses the free availability of content on the internet as its main selling point. Basic services are free, while premium versions can be added later.

Although faced with hostility by some recording artists, Spotify has shown itself to be resilient and very successful. Rather than paying for one-off products, Spotify pays artists royalties each time their music is streamed. While the payment per stream might be low, the sheer volume of streams gives artists constant revenue.

Although Spotify has rarely been in profit, it survived to become strong enough to launch on the NYSE in April 2018. It has launched initiatives to work with artists and music labels in a bid to appear more artist-friendly. The relative success of these gave shares a boost during the summer months, which has since dropped off.

Trading Spotify: What You Need to Know

  • Spotify had a strong opening on the NYSE on 3 April 2018, with its share price starting at $165.90. The Exchange had set the reference price at $132, based on an equity calculation of $29.5bn. That immediately raised in value by 25%.
  • As of 3 January 2019, Spotify’s NYSE share price was $117.17.
  • The technology market’s NASDAQ index had Spotify starting at $149. As at 2 January 2019, that was $113.74. Spotify shares on the NASDAQ peaked at over $190 in July / August 2018, but have been on a gradual decline since October.
  • As of January 2019, Spotify had 200 million active users per month, and 87 million subscribers.
  • Spotify has developed apps for use across all smart devices, including Windows, MacOS, Linux OS, Android, iOS and Windows Phone. It also has its own Spotify Connect system, which lets users access music via Spotify and play on a range of hardware, from car speakers to smart watches.
  • As of November2018, Spotify linked up with Google Home to provide its services via Google’s voice recognition technology. It is hoped this will provide a boost to the streaming company’s profile.
  • Suggestions for future success for Spotify include creating its own record label and hardware. It faces stiff competition from Apple and Amazon in terms of the music it can access to play on certain devices. Its partnership with Google Home is a positive step, but share prices have not shown any benefit as yet.

Anyone wanting to trade Spotify stock should analyze stock history and market conditions before trading.

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