Spotify Stock Drops Over 12% on Softened Listener Forecast
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Bulletin YOUR DAILY ENTERTAINMENT NEWS UPDATE APRIL 29, 2021 Page 1 of 29 Spotify Stock Drops Over 12% on INSIDE Softened Listener Forecast • After Briefly Forfeiting Salary, BY GLENN PEOPLES Live Nation CEO Michael Rapino potify stock fell as much as 12.9% to $256.84 That MAU adjustment could have a larger financial Earned $1.7M on Wednesday (April 28) after the stream- impact in the future, as Spotify uses its freemium busi- Last Year ing service decreased its forecasted listener ness model to acquire new subscribers. So, fewer free • Apple Touts count for the end of 2021. Share prices ended listeners this year means there will be fewer potential 660 Million Paid Sthe day down 12.3% at $256.84. subscribers in the future. Subscriptions Across The considerable drop followed Spotify’s first Chopping $7.2 billion from Spotify’s market Music, TV quarter 2021 earnings report, a mix of encouraging capitalization is an overreaction, according to Brian & Other Services trends and subtle misses. The company’s guidance for White at Monness Crespi Hardt. White wrote in • Endeavor Goes end-of-year listeners, referred to as monthly aver- a note to investors on Wednesday that he believes Public, Seeking to age listeners, decreased by a mere 5 million — from a Spotify’s fundamentals remain strong and Wednes- Raise $588 Million range of 407 million to 427 million down to 402 mil- day’s sell-off is a good buying opportunity. “We have • Pay It Again, lion to 427 million. found the market often takes issue with a particular Sam: We Still Need That adjustment followed Spotify’s reported first- data point during a Spotify earnings call and the stock New Publishing quarter monthly active users (MAU) of 356 million, subsequently plummets,” he said. Infrastructure falling on the bottom end of earlier guidance. How big was investors’ reaction? Compared to the (Guest Op-Ed) There was good news too, though. First-quarter plummet in market capitalization, the financial impact MARKET WATCH subscriptions were at the high end of guidance, and is a drop in the ocean. In simple terms, the revenue PAGE 26 Spotify did not revise its 2021 guidance for subscribers loss from a 5 million decrease in free listeners is worth SONGWRITERS (172 million to 184 million), suggesting it expects the just €20.8 million for all of 2021, or 0.2% of annual & PRODUCERS dip to come from “freemium” listeners. Average rev- revenue, according to Billboard’s estimate. CHARTS enue per month on those free listeners is 0.35 euros Of course, many factors could be behind the price PAGES 27 - 29 ($0.42), compared to subscribers’ 4.07 euros ($4.94) drop. MAU growth in Latin America and Southeast per month. (Subscribers account for about 90% of the Asia has slowed after they were “strong outperform- company’s total revenue.) (continued) TOTAL IMMERSION ESSENTIAL ANALYSIS of the latest business topics and trends formulated to give industry players the competitive advantage in a rapidly changing market. EXCLUSIVE QUARTERLY REPORTS that deliver in-depth, holistic reporting; case studies; and custom data designed to serve the industry. A DEEP DIVE LIBRARY stocked with intelligence on fan data, SUBSCRIBE TO BILLBOARD PRO FOR song catalog sales, TV synchs, Africa’s burgeoning music ACCESS TO NEW REPORTS business and the gaming industry’s embrace of artists. AND THE ARCHIVE Page 3 of 29 IN BRIEF ers,” CEO Daniel Ek said in Wednesday’s Spotify’s share price began 2021 at $317.42 Tuesday. On top of that, Rapino received an- earnings call. Average revenue per user and rose to $387.44 on Feb. 19 before falling other $216,000 in travel costs and allowances (ARPU) fell 1% to 4.12 euros ($5.00) per as low as $249.00 on March 30 — a 35.7% — including a $75,000 per year automobile month and has consistently fallen because tumble in just 39 days. allowance and $141,000 for private air travel more subscribers buy family plans, which al- — for a total of $1.89 million. low up to six people on one account, and ex- Live Nation’s revenue dropped 84% pansion into new markets with lower prices. in 2020, compared to the year prior, as ARPU is a messy metric for gauging a After Briefly concerts largely shut down in May due to subscription service’s performance — Spo- the coronavirus pandemic. That led to deep tify would point out that family plans have Forfeiting Salary, layoffs across the company globally — while lower churn rates, which directly impact a an exact number has not been released by subscriber’s value. Nevertheless, ARPU is a Live Nation CEO company officials, Live Nation has made highly visible and closely followed metric. deep cuts of it’s 11,000 person staff through JP Morgan’s Doug Anmuth is still upbeat Michael Rapino both layoffs and furloughs over three rounds about Spotify, especially about opportunities of cuts in April, May and September affect- to engage listeners with new services such Earned $1.7M ing more than 50 percent of all employees as Locker Room. Even so, Anmuth dropped After stock prices dropped 54% in the first his price target from $385 to $330 because Last Year weeks of the shut down, investor optimism of “mixed results” in a note to investors on rebounded and is now high as live events Wednesday. White, calling MAU concerns BY DAVE BROOKS are set to return later this year. The com- “nothing more than noise,” maintained his pany’s stock has increased 19% over the com- price target at $380. fter Live Nation CEO Michael pany’s 2019 record high, hitting a record high Investors have been excited by news of Rapino announced he was re- $89.81 a share on March 5 (it closed at $82.27 podcast acquisitions and deals for exclusive ducing his salary to $0 in April on Tuesday), bolstered by high expectations and original content with the hopes spoken- 2020 as part of a $500 million for the return of live music and trillions of word audio would improve their margins costA reduction plan, he quietly started pay- dollars pumped into the economy by both the that stem mostly from music companies’ ing himself again two months later, accord- Trumps and Biden administrations. royalties demands. Spotify’s exclusive ing to filings with the government. Rapino’s salary is pretty comparable to licensing with The Joe Rogan Experience, its In June 2020, Rapino’s salary was reinstat- other chief executives in the travel industry, top podcast in numerous markets, started in ed at 50%, then reduced to 40% in Septem- which also faced dramatic revenue dips as December. It rolls out one original podcast ber, allowing the chief executive to collect a result of the pandemic: Alaska Air Group series after another, most notably Renegades: $1.66 million in compensation in 2020, chief executive Brad Tilden’s adjusted total Born in the USA with Bruce Springsteen and according to a proxy statement filled with compensation in 2020 was $3.2 million, Barrack Obama, which premiered Feb. 19. the Securities and Exchange Commission on down from $5.5 million in 2019, a more than AUTHORITATIVE INTELLIGENCE. DELIVERED DIGITALLY. CLICK HERE FOR FREE DELIVERY DIGITAL NEWSLETTERS GENE SMITH ...An Ad Man... Billboard mourns the loss of our colleague. He will be missed and remembered by the entire industry for his dedication, passion and love of the business and our brand. 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