Barcelona FC Eyes NFTs and the Metaverse after Fan Token Surge

Key Insights:

  • Barcelona FC President Joan Laporta discloses club ambitions for greater fan engagement.
  • Increased activity in the digital asset space has seen Barcelona FC’s Fan Token (BAR) surge in recent days.
  • UEFA and Fan Token platform Socios partnership suggests more activity to come.

Spanish football and cryptos have had a long-lasting relationship. In early 2021, Barcelona FC partnered with Binance to deliver fans with FC Barcelona fan tokens (BAR). The club was among the first to launch a fan token and is looking to lead the way again.

Barcelona football club’s interest in digital assets and virtuality has expanded this year.

Barcelona FC Eyes NFTs and the Metaverse

This week, team president Joan Laporta discussed the club exploring blockchain, NFTs, and the Metaverse. The club is reportedly looking for opportunities to deliver growth and sustainability.

Barcelona FC’s president also talked of an NFT launch, plans to develop a Barca crypto, and other means to build fan engagement.

This week’s news coincided with a breakout day for the Barcelona FC fan token (BAR).

UEFA and Socios Collaboration Drives Barcelona FC’s BAR Token

In February, news of the Socios fan token platform partnering with UEFA to bring NFTs has driven demand for football fan tokens.

The Socios team announced on Twitter that “UEFA club Competition Fan Tokens are coming to the Socios App.” According to the announcement, “Fan Tokens will be exclusively available for free to Fan Tokens holders of clubs participating in European football competitions including the Champions League and Europa League.”

BAR rallied by 19.74% against the U.S Dollar on Monday, following a 16.93% breakout on Sunday. The rally to a February high of $9.75 came in response to Barcelona FC President’s comments.

Following Monday’s breakout, BAR rose by 8.99% on Tuesday. The latest rally brings December’s high of $12.785 into play.

BARUSD

Last month, Barcelona FC parted ways with the team’s main sponsor Rakuten in favor of Spotify (SPOT). Crypto-related names Binance (BNB), FTX (FTT), and Polkadot (DOT) were in the running for the coveted sponsorship deal.

Binance came up short despite having only recently signed a deal to sponsor Argentina’s national soccer team and launching Barcelona FC’s very own fan token.

At the time of the decision, media outlets reported Barcelona FC citing a lack of confidence in the crypto sector and a lack of economic solidity as reasons for rejecting the crypto exchange offers.

Barcelona’s ambitions to enter the NFT space and virtuality suggest that some form of collaboration with crypto-related firms is on the horizon.

Spanish Football Giant Barcelona Says no to Crypto Sponsors

While the world of sport and crypto continues to unite, Binance (BNB) took its first sponsorship deal rejection this week. The rejection came despite crypto platforms successfully targeting sports teams in recent months to build brand awareness.

Barcelona FC Says No to Crypto Sponsorship Deal

On Tuesday, Barcelona FC reportedly rejected sponsorship deals with crypto-related entities. According to the media, Barcelona FC cited a lack of confidence in the crypto sector and a lack of economic solidity as reasons for rejecting the crypto exchange offers.

The report added that the club is in the final stages of negotiations with Spotify (SPOT) in a deal worth €70-€75 million a season.

Barca’s decision to go mainstream bucked a recent trend that has seen crypto platforms immerse in the world of sport. The decision also came despite Binance launching the Barcelona Fan Token (BAR) last April. At the time of writing, BAR ranked #781 on CoinMarketCap, with a market capitalization of $19.61m.

Regulatory Scrutiny and Crypto Market volatility Likely Factors

The Barcelona FC decision bucked a recent trend that saw Binance becoming the main sponsor of the Argentine National soccer team. Similar to the fan token agreement with Barca, Binance will develop a new Argentine national team Fan Token. In 2021, Binance had issued a fan token in recognition of its sponsorship deal with Italian football team Lazio.

Other crypto names in the hunt for the Barca sponsorship deal had included FTX (FTT) and Polkadot (DOT).

For Barcelona FC, a marked increase in regulatory scrutiny and crypto market volatility likely contributed to the decision.

Binance has not been far from the news wires in recent months as regulators target crypto exchanges and the crypto market. In 2021, Binance withdrew its application for a Singapore license. Binance has also come under regulatory scrutiny in India, the UK, the U.S, and Canada.

As crypto-related companies look to build brand awareness via sport, increased regulatory scrutiny could further test the success of platforms such as Binance to win sponsorship deals. Reputation remains a key consideration for mainstream players. Uncertainty is also another factor. Central banks and governments have been clamping down on crypto advertising. For sponsorship deals, a ban on crypto advertising would have a negative impact on marketing and fan engagement.

NYSE Files NFT and Metaverse Related Trademark Applications

The flurry of NFT and the Metaverse related activity continue to hit the news wires this week. As activity grows, trading volumes and lucrative fees also rise, drawing the interest of mainstream market places.

The New York Stock Exchange

Located on Wall Street, the NYSE is the world’s largest stock exchange. Founded under a buttonwood tree in 1792, the exchange evolved from a group of just 24 stockbrokers and adopted its current name in 1863. Ownership was controlled by members, capped at 1,366 since 1953 until members became shareholders in December 2005. In anticipation of a change in structure, some seats on the exchange sold for as much as $4m. Significantly, the exchange was an instrumental part of the U.S industrial revolution.

On the regulatory front, it was the 1929 crash that placed the NYSE under the purview of the Securities and Exchange Commission (SEC).

The NYSE and U.S Companies Pave the Way for NFTs and the Metaverse

Ahead of the NYSE application, a number of U.S listed companies have filed similar trademark applications. These include Microsoft (MSFT), Warner Brothers (AT&T), and McDonald’s (MCD). Back in April 2021, even the NYSE minted NFTs in celebration of first trades for Coupang, DoorDash, Roblox, Snowflake, Spotify, and Unity. Each NFT is a short video clip providing details of the first trade. The Spotify NFT is viewable on Crypto.com (CRO).

NYSE Looks to Expand to NFTs and the Metaverse

Late last week, the New York Stock Exchange filed a trademark application that suggests new endeavors in NFTs and the Metaverse.

According to the trademark application, the NYSE aims to provide an online market place for buyers, sellers, and traders of:

  • Downloadable digital goods authenticated by NFTs;
  • Virtual and digital assets, artwork, collectibles, and NFTs;
  • Digital currency, virtual currency, cryptocurrency, digital tokens, crypto tokens, and utility tokens.
  • Downloadable digital art images authenticated by NFTs.

Additionally, the application requests for

  • Developing and designing virtual retail stores, virtual stores, and virtual showrooms.

With regulatory scrutiny on the rise, the New York Stock Exchange’s expansion into NFTs and the Metaverse will be an interesting one to watch.

Coinbase and Cardano Call on Hackers to Plug Security Gaps

Cybercrime surged in 2021 and hackers and other cyber criminals are looking for another bumper year this year. As cyber criminals become more sophisticated, crypto platforms need to be even smarter to protect investors and users from hacks and other types of criminal activity.

Ransomware, Hacks, and other Illicit Activity Hurt Digital Asset Value

Late last week, we reported on prelim ransomware numbers for 2021 and likely finalized numbers. Based on prelim figures and upward revisions to 2020 numbers, ransomware alone could hit more than $1bn in 2021. There was also news of North Korea funding its missile program with stolen crypto.

With the likes of North Korea actively hitting the crypto market for source of funds, government scrutiny has also increased. In late January, the White House announced an imminent crypto executive order to task agencies with crypto oversight in the interest of national security.

As governments and regulators look to take a more active role in the crypto market, crypto platforms will also need to step up or face the wrath of regulators.

The issue doesn’t just lie with crypto exchanges, however, with the NFT marketplace and the Metaverse also considered as a medium for illegal activity. China, India, the UK, and a number of other governments have highlighted the need to clamp down on illicit activity.

Cardano and Coinbase Look Outside to Tighten Security

This week, the Cardano Foundation (ADA) announced a 6-week promotion running from 14th February to 25th March. The Foundation doubled its bounty amounts for the period. Hackers can earn up to $20,000 for identifying critical Cardano Node security vulnerabilities. The security community can also earn up to $15,000 for identifying critical Cardano-Wallet security vulnerabilities.

Coinbase was also in the news this week, with a lone hacker reportedly assisting Coinbase with a security flaw. A hacker going by the name Tree of Alpha tweeted over the weekend of a “potentially market-nuking” security flaw. Tree of Alpha tweeted a submission of a hacker1 report but also the pressing need for direct contact with the Coinbase team.

Hackerone is a platform started by hackers and security experts with the aim of making the internet a safer place. The platform partners with hackers to uncover security issues for customers before they are exploited by criminals. Users include Starbucks, Nintendo, PayPal, Spotify, Toyota, the European Commission, among others.

The collaboration and effectiveness of Hackerone was evident in the Coinbase fix. Brian Armstrong himself replied directly to Tree of Alpha to give thanks.

Top 4 Things Traders Have to Know Today

What is happening with Meta, Paypal and Spotify?

Spotify didn’t actually issue annual guidance, which seems to have exacerbated worries about potential subscriber growth potential. All three were down by double-digits in after hours trading at one point last night.

Competition is clearly much more fierce as larger players are starting to dial it in and use the latest technology to gain better traction i.e. Visa, Mastercard, etc. I also read reports this week that Apple is diving deeper into the payment and banking space and will soon be able to offer all kinds of options via the smartphone.

In simple terms, I wonder if PayPal executives could see they had a “growth” problem and that’s why they took a look at Pinterest a few months back. I heard rumors yesterday perhaps they might be looking at Robinhood.

At the moment the stock market just doesn’t seem real forgiving to those who swing and miss. On a somewhat positive note, Facebook disclosed they purchased back +$20 billion of their own stock in the last quarter.

Bulls are hoping for solid results from Amazon and Snap today to help prevent sentiment in the tech sector from creating more fallout. I’m not holding my breath!

Data to watch

Results are also due from Activision Blizzard, Biogen, Carlyle Group, Check Point, Cigna, Clorox, ConocoPhillips, Deckers Outdoors, Eli Lilly, Estee Lauder, Ford, Hanesbrands, Hershey, Honeywell, Ingredion, Merck, Pinterest, Quest Diagnostics, Royal Dutch Shell, SnapOn, Wynn Resorts, and Xylem.

On the economic data front, Factory Orders, the ISM Non-Manufacturing Index, and Productivity and Costs are due today. Productivity and Costs has become a more closely watched report as worries about climbing wages have grown. In the third quarter, productivity fell -5.2% (the most since 1960) and labor costs rose +9.6%.

Obviously, weakening productivity and rising costs is a bad combo for corporate profits so reversing this trend is a high priority. It may be tough to find much relief in the near-term with the labor market expected to remain extremely tight.

The shortage of workers has also been exacerbated by the latest Covid wave. ADP’s private payrolls report yesterday showed a decline of -301,000 jobs for January versus the estimate for a +200,000 gain, the first reported net job less since December 2020 according ADP.

Covid issue

Most analysts blame last month’s Covid surge for the decline and expect it is just temporary. The official January Employment Report on Friday is expected to show a gain of around +150,000 jobs, though the government has warned that the data won’t be reliable due to Covid-related reporting problems. Hopefully we’ll soon stop hearing that excuse as the Omicron Covid wave does seem to be burning itself out in the U.S. Case numbers across the country are about half of what they were in mid-January.

Hospitalizations have finally started to come down, too, which experts say is a more reliable measure. I hate to mention it but health officials are currently monitoring a mutated strain of Omicron known as “BA.2″… when does it end?

The standoff between Ukraine and Russia

Also still on the radar is the standoff between Russia and Ukraine. The U.S. is now readying to send more than +3,000 troops to bases in Eastern Europe as new satellite images appeared to show an even further increase in Russian troop buildup on Ukraine’s borders. Whether or not war is a realistic threat or not, the climbing tensions continue to stoke the flames in the energy markets.

Brent crude futures are trading near $90 as OPEC struggles to meet production targets and global physical supplies continue to tighten. The 19 OPEC+ countries with quotas underperformed their production targets by -832,000 b/d in December. Russia is currently the top OPEC+ producer, so any disruption to those supplies runs the risk of shooting oil prices even higher. Take note the front-end of the natural gas market is up over +50% in the first month of the new year. It’s certainly going to be a wild ride in 2022!

 

Spotify Testing Resistance Ahead of Report

Spotify Technology S.A. (SPOT) reports Q4 2021 earnings after Wednesday’s closing bell, with analysts looking for a loss of $0.36 per-share on $2.65 billion in revenue. If met, negative earnings-per-share (EPS) will mark a 46% improvement compared to the same quarter in 2020. The company has reported a loss in nearly all quarters since coming public in 2018. SPOT rose 9.27% in October, despite posting a larger-than expected Q3 loss, but has dropped more than 40% since that time.

The Left Targets Joe Rogan (Again)

The stock plunged with other speculative growth plays in January but pundits placed most of blame on controversy surrounding the wildly popular Joe Rogan podcast. Spotify paid Rogan more than $100 million to move to the service in May 2020 and they haven’t been disappointed, given millions of ears and eyeballs tuning into the podcast. However, strong user metrics have failed to translate into profits and the outrage is giving shareholders another reason to lose sleep at night.

Citigroup upgraded Spotify to a ‘Buy’ rating on Monday, noting “while Netflix and Spotify may see more modest sub growth, we see other top-line vectors. For Netflix, we believe the firm has ample pricing power. For Spotify, we believe the firm can improve ad-supported monetization,” However, the analyst also lowered SPOT’s price target from $275 to $240, in recognition of slowing subscription trends that are unlikely to improve in 2022.

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating based upon 16 ‘Buy’, 0 ‘Overweight’, 10 ‘Hold’, and 1 ‘Underweight’ recommendation. In addition, three analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $140 to a Street-high $332 while the stock is set to open Wednesday’s U.S. session more than $50 below the average $259 target.

Spotify broke out above 2018 resistance near 200 in June 2020, entering a strong uptrend that posted an all-time high at 387.44 in February 2021. The subsequent decline broke 200-day moving average support in April, yielding seven months of testing, followed by an aggressive selling wave that’s relinquished nearly 50% of the stock’s value since November. It’s now bouncing with the broad averages but heavy resistance above 200 is likely to end the uptick, dead in its tracks.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Alphabet Beats Sales Estimates, Posts Record Profit Again on Google Ad Surge

Through its search engine, YouTube video service and partnerships across the Web, Google sells more internet ads than any other company. Demand for its services surged in the past year as the pandemic forced people to spend more time online, and their new habits have persisted.

Google advertising revenue rose 41% to $53.1 billion during the third quarter. Alphabet’s overall sales jumped to $65.1 billion, above the average estimate of $63.336 billion among analysts tracked by Refinitiv.

Shares fell 0.69% to $2,767 following the after-hours release of the financial results.

Quarterly profit was $18.936 billion or $27.99 per share, beating expectations of $24.08 per share and marking a third-straight quarter of record profit. Alphabet’s profit is subject to wide fluctuations because accounting rules require the company to measure unrealized gains from its investments in startups as income.

Anxiety by consumers over how Google and other companies use their browsing behavior to profile them and then pick which ads to show has become widespread. In the latest challenge, Apple Inc, whose iPhones account for half of the smartphones in the United States, gave its users more control to stop tracking over the past few months. The change led advertisers to recalibrate their spending in ways that Google rivals Snap Inc and Facebook Inc said hurt their third-quarter sales.

Google may have been less affected because its search engine collects data on user interests that is valuable to advertisers and unmatched in the industry.

Google Cloud, which trails Amazon.com Inc and Microsoft Corp in market share, increased revenue by 45% to $4.99 billion, slightly below estimates of $5.2 billion.

Alphabet’s total costs increased 26% to $44.1 billion in the third quarter and the company’s workforce size passed 150,000 employees.

Alphabet shares have outperformed those of many big peers since the end of last year, rising about 57%. Microsoft is up 39%, Facebook 20% and Amazon 2% over the same period. But shares of Alphabet trade at a slight discount to Facebook, the internet’s No. 2 seller of online ads. Facebook trades at 6.8 times expected revenue over the next 12 months compared with 6.4 times for Alphabet.

Facebook has been swamped with accusations in recent weeks from a former employee who leaked thousands of confidential company files to media and filed complaints with the U.S. securities regulator over alleged misrepresentations by the company about its risks from hosting inappropriate content.

Google has been caught up in some of the fallout. A YouTube policy official testified to U.S. Congress earlier on Tuesday alongside other companies about the harms of social media to young users.

Investors also await further changes to Google’s businesses as a result of scrutiny of the company’s market power. U.S. and other authorities have alleged some of the company’s practices in advertising and search are anticompetitive, though the company argues they are to benefit users. In one concession to critics last week, Google said it would cut some of the fees it collects from apps on its Play app store starting next year.

But the move could end up generating new revenue for Google if it leads companies such as music streamer Spotify Technology SA to start selling subscriptions through their apps and giving Google 10% to 15% of the sum.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Nivedita Balu in Bengaluru and Paresh Dave in Oakland, Calif.; Editing by Arun Koyyur and Matthew Lewis)

Universal Music Valued Around $39 Billion Ahead of Stock Market Debut

France’s Vivendi is spinning off Universal and on Monday set a reference price for the listing at 18.5 euros per share, according to a statement issued by Euronext.

Universal Music Group’s (UMG) listing will be Europe’s largest this year and will hand 60% of shares to Vivendi shareholders.

Universal is betting that a boom in streaming led by Spotify that has fuelled royalty revenue and profit growth for several years still has a long way to run, in a music industry it dominates along with Warner and Sony Music, part of Sony Group Corp.

Its flotation carries high stakes for Canal+ owner Vivendi, which hopes to rid itself of a conglomerate discount. However, the listing raises questions about Vivendi’s strategy once it parts ways with its cash cow, in which it will retain only a 10% stake.

Several high-profile investors have also already snapped up large Universal stakes, banking in part on the group’s back catalogue, which includes the likes of Bob Dylan and the Beatles. They also hope deals with ad-supported software and social media platforms such as Alphabet Inc’s YouTube and TikTok will sustain its performance and valuation.

U.S. billionaire William Ackman suffered a setback when his attempt to invest in Universal via a special purpose acquisition vehicle (SPAC) hit a snag with regulators and investors. However, Ackman still got a 10% stake via his Pershing Square hedge fund. China’s Tencent owns 20% of Universal.

One winner in the listing will be Vincent Bollore, the French media tycoon who is Vivendi’s controlling shareholder. He will receive Universal shares worth 6 billion euros at Monday’s price.

Bollore has been an aggressive consolidator in France’s media and publishing landscape, and he has a long-held ambition to build up a southern European media powerhouse.

Vivendi itself may suffer in the short run, however, and shares are expected to fall Tuesday as they begin trading without Universal.

BNP Paribas, Natixis, Credit Agricole, Morgan Stanley and Societe Generale are the lead financial advisers on the deal, out of 17 banks in total — an unusually large total.

The fee pot is expected to be below standard listings as no fresh cash is being raised as part of the spin-off.

Universal said in its prospectus that the overall expenses to be paid in relation to the Universal deal would not go beyond 0.5% of the total amount of the share distribution.

The listing is the latest win for Euronext in Amsterdam, which has grown as a financial centre in the wake of Britain’s departure from the European Union. Before Universal, Amsterdam had attracted a record 14 IPOs so far this year, of which 10 were SPACs.

But the only Amsterdam listing of a size comparable to Universal in recent history was the 95 billion euro listing of technology investor Prosus, also a spin-off, in September 2019.

For a look at all of today’s economic events, check out our economic calendar.

($1 = 0.8524 euros)

(Additional reporting by Toby Sterling; Writing by Sarah White; Editing by David Evans and Lisa Shumaker)

Spotify Quarterly Revenue Beats on Higher Users, Ad Rebound

The top end of the company’s current-quarter forecast for revenue and premium subscribers were also ahead of expectations.

Spotify forecast revenue of 2.31-2.51 billion euros, and 170-174 million premium subscribers. Analysts on average were expecting revenue of 2.39 billion euros and 170.4 million subscribers.

COVID-19 continued to weigh on its performance in several markets, but revenue from its ad business, which last year took a hit due to the pandemic, grew 110% to 275 million euros.

Spotify has also been investing heavily in its podcast business to rival that of Apple and in April launched a paid subscription platform for podcasters in the United States.

The company currently has 2.9 million podcasts on its platform and podcast share of overall consumption hours reached an all-time high in the quarter.

Its podcasts by personalities such as Joe Rogan and Bill Simmons continue to draw more users. Revenue rose to 2.33 billion euros ($2.75 billion) for the quarter from 2.15 billion a year earlier, above the 2.29 billion expected by analysts, IBES data from Refinitiv showed. Premium subscribers, which account for most of the company’s revenue, hit 165 million, matching analysts’ expectations.

Total monthly active users rose 22% to 365 million.

The company reported a net loss of 20 million euros, or 19 euro cents per share, improving on a loss of 356 million euros or 1.91 euros per share a year earlier and beating the loss of 37 euro cents expected by analysts.

Spotify shares were up 3.5% in premarket trading.

($1 = 0.8460 euros)

(Reporting by Supantha Mukherjee, European Technology & Telecoms Correspondent, based in Stockholm, editing by Helena Soderpalm and Jason Neely)

British Fintech Giant Wise Starts Solidly After Debuting On The Stock Market

Wise launched on the London Stock Exchange earlier today and is already performing excellently. Analysts are optimistic that Wise’s listing on the market could serve as a boost to the London tech community.

Wise Now A Publicly Listed Company

Wise, formerly known as Transferwise, has become a publicly listed company. The London-based company went public via a direct listing method instead of the conventional initial public offering (IPO).

The direct listing method has become popular since Spotify debuted it in 2018. Via this listing method, the private backers are selling their existing shares to the public instead of raising money using an IPO. Leading cryptocurrency exchange Coinbase also went public via the direct listing method a few months ago.

Spotify stock chart. Source: FXEMPIRE

Wise’s stock began trading at a modest £8 a share at 11 a.m. London time and it is currently trading around £8.40. The company is currently valued above £8 billion ($11 billion). The listing is considered a milestone event in the UK as the country looks to become a global tech hub after withdrawing from the European Union.

The company would be looking to fare better than Coinbase. The cryptocurrency exchange’s stock price has plummeted in recent months, and it is currently trading at $237 per share, down from its high of $429 in April.

UK’s Fintech Community is Growing

The United Kingdom is becoming home to some of the world’s leading fintech companies. Wise is one of the most popular fintech unicorn companies to emerge from the UK in recent years. The UK has produced other multibillion-dollar firms, including Revolut and Checkout.com.

Following Wise’s listing on the London Stock Exchange, the firm launched a program called OwnWise. The program allows its users to own a stake in the company, and participants in the scheme would get to enjoy bonus shares worth up to a maximum of £100 after 12 months. It is an unusual move because if people intend to own a stake in the company, the best way to achieve it would be to buy some of the company’s shares.

Storytel Signs Audiobooks Partnership with Spotify, Shares Jump

By Supantha Mukherjee

Storytel offers listening and reading of more than 500,000 titles across 25 markets and competes with the likes of Amazon’s Audible.

“We think this is a great partnership and a way to get access to more potential audiobook listeners around the world,” CEO Jonas Tellander told Reuters. “We are growing at about 30% annually and we are hoping that this will contribute a lot to that.”

Spotify recently tied up with Facebook to allow listeners to play music and podcasts directly from the social network’s iOS and Android apps.

Storytel has books in 30 languages but is restricted to the country a subscriber is in and the kind of credit cards they use. Spotify is available in more than 150 countries and have 356 million total monthly active users.

Storytel, which has roughly 1.6 million subscribers, is working to make its books available in different countries as it has worldwide rights for most of the audiobooks in several languages, Tellander said.

However, to access the audiobooks, Spotify subscribers would still need a Storytel subscription.

(Reporting by Supantha Mukherjee, European Technology & Telecoms Correspondent, based in Stockholm; editing by Niklas Pollard)

Spotify Shares Fall After Muted Paid Subscriber Growth Forecast

By Supantha Mukherjee

While Spotify has seen a sharp rise in subscribers during the pandemic as people stayed at home due to lockdowns, it faces growing competition from Apple Music, Amazon Music and a handful of smaller rivals.

“Some markets are more advanced in recovering, some are still very much in the sort of pandemic landscape and I think that’s going to play out over the course of the year,” Chief Executive Daniel Ek said in an interview.

Spotify, which launched its services in 86 new countries in the first quarter, said growth in the United States, Mexico, Russia, and India offset lower-than-expected growth in Latin America and Europe.

Ek said he was encouraged by the pent up demand seen in new markets. “This is the sort of next billion user opportunity that we are seeing the early inklings of,” he said.

The company launched several products in the quarter, partnered with Facebook and unveiled a paid podcast subscription platform, a week after Apple.

Spotify has put a lot of effort and money to build the business and now has millions of podcast titles, including “Renegades: Born in the USA” featuring former U.S. President Barack Obama and Bruce Springsteen, and “The Joe Rogan Experience”.

The company expects total premium subscribers in the range of 162 million to 166 million for the second quarter, with consensus forecasts pitched at 166.1 million, according to IBES data from Refinitiv.

The quarterly subscriber guidance seems achievable, especially as the pandemic continues to drive demand for audio content, said Alexandre Jornod, an analyst at Futuresource Consulting.

It forecast total revenue in a 2.16 billion euro to 2.36 billion euro range with analysts consensus estimate at 2.27 billion euros.

First quarter premium subscribers were up 21% to 158 million from a year earlier. Analysts on average were expecting the company to have 157.5 million paid subscribers, according to IBES data from Refinitiv. Revenue rose to 2.15 billion euros for the three months ended March 31, beating expectations.

(Reporting by Supantha Mukherjee in Stockholm; editing by Emelia Sithole-Matarise and Elaine Hardcastle)

Spotify Under Pressure After Another Losing Quarter

Spotify Technology S.A. (SPOT) is trading lower by 8% on Wednesday despite reporting a better-than-expected Q1 2021 loss and meeting revenue estimates. The European streaming platform lost  €0.25 per share during the quarter, €0.18 better than estimates, while revenue grew 16.2% year-over-year to €2.15 billion, right on consensus. Revenue has shown no acceleration in the last five quarters, despite the pandemic and well-publicized content deals.

A Sea of Red Ink

And the company keeps losing money. According to an industry publication, the service lost the equivalent of $2.2 million every day in 2020 while spending over $1 billion on sales and marketing. Meanwhile, Monthly Average User (MAU) data for the latest quarter raises fresh doubts about the quest for profitability, with 24% year-over-year growth “modestly below our internal expectations” due to weakness in Latin America and Europe.

However, Spotify still has loyal fans on Wall Street. Jefferies analyst Andy Uerkwitz posted a Buy rating and $360 target last week, noting “Spotify is more platform than streaming service. The subtle differences are platforms have stickier customers, less likely to be disintermediated by new technologies, and longer tail of growth/margin expansion. We believe we are in the early innings of a creator economy where content creation/distribution/marketing has been democratized, in which Spotify will become the primary audio platform for creators.”

Wall Street and Technical Outlook

Wall Street consensus now stands at an ‘Overweight’ rating based upon 13 ‘Buy’, 13 ‘Hold’, and 2 ‘Underweight’ recommendations. Three analysts recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $300 to a Street-high $450 while the stock is set to open the U.S. session nearly $75 below the median $345 target. It’s obvious from this disconnect that Main Street investors would rather own profitable companies.

Spotify came public on U.S. exchanges in the 160s in April 2018 and topped out near 200 in July. It mounted resistance in June 2020 and took off on a two-legged uptrend that posted an all-time high at $387.44 in February 2021. The stock fell more than 35% into the end of March and bounced at the 200-day moving average while price action into this week’s report continues to test that critical support level.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Spotify Launches Podcast Subscription Platform to Challenge Apple

A podcaster could mark episodes as subscriber-only and publish them on Spotify and other podcast listening platforms, the company said in a statement.

Spotify, the world’s most popular paid music streaming service, said it won’t take a commission from podcast creators’ subscriber revenue for the next two years, and planned to charge a 5% fee starting in 2023.

Online stores such as Apple’s app store usually charge developers a fee for purchases made on their platforms.

Spotify filed https://www.reuters.com/article/us-apple-spotify-tech-idUSKCN1TP2D0 a complaint two years ago with European Union regulators saying that the fees Apple charges for taking payments through the store had made it unfairly difficult for rivals to compete for music subscribers.

Apple competes with Spotify for music streaming and earlier this month unveiled https://www.reuters.com/technology/apple-goes-battle-with-spotify-premium-podcast-push-2021-04-20/#:~:text=Spotify’s%20acquisitions%20include%20about%20%24340,offers%20advertising%20technology%20for%20podcasts a subscription platform that will cost $19.99 per month and will provide creators the tools they need to offer podcast subscriptions.

Spotify has selected 12 independent podcasters to publish subscriber-only bonus content in their existing podcast feeds, and the company will also expand the programme to more creators over the coming months.

National Public Radio (NPR) will publish five ad-free shows for paid subscribers from May 4, including “How I Built This with Guy Raz” and “Planet Money”.

Spotify has been boosting its podcast muscle by spending more than half a billion dollars in buying podcast networks Gimlet and Anchor, and podcast ad company Megaphone.

The new subscription tool is built using Anchor’s platform.

The Swedish company is also testing a system where content publishers on other platforms with existing subscriber bases can deliver paid content using Spotify.

(Reporting by Supantha Mukherjee, European Technology & Telecoms Correspondent; Editing by Emelia Sithole-Matarise)

Spotify’s New Tie-Up to Allow Listeners Play Music, Podcasts from Facebook App

Facebook last week said it planned to launch several audio products, including Clubhouse-style live audio rooms and a way for users to find and play podcasts.

The new integration is rolling out in 27 markets, including the U.S. and Canada, with additional markets to follow in the coming month, Spotify said in a statement.

Spotify’s paid subscribers would be able to access full playback without advertisements without leaving the Facebook app.

Apple last week said it will launch podcast subscriptions, which will let users pay to unlock new content and additional benefits like ad-free listening, intensifying competition with Spotify.

Both Spotify and Facebook have been fighting Apple on different fronts, from privacy changes on iOS devices to the 30% fee levied on app developers to use the iPhone maker’s in-app purchase system.

Apple has said its App Store helped Spotify to benefit from hundreds of millions of app downloads to become Europe’s largest music streaming service.

(Reporting by Supantha Mukherjee, European Technology & Telecoms Correspondent, based in Stockholm; Editing by Kirsten Donovan)

Spotify Buys Locker Room App’s maker Betty Labs in Live Audio Push

By Elizabeth Culliford

New voice-based platforms, including invite-only social app Clubhouse, have seen rapid growth in recent months during the COVID-19 pandemic. Locker Room, launched in October 2020, became a popular spot for sports fans to chat and hold watch parties.

The music-streaming service said in the coming months it would “evolve and expand” Locker Room to offer sports, music, and cultural programming as well as live discussions with professional athletes, musicians and other personalities.

“Creators and fans have been asking for live formats on Spotify, and we’re excited that soon, we’ll make them available to hundreds of millions of listeners and millions of creators on our platform,” said Gustav Söderström, Chief Research & Development Officer at Spotify.

Spotify did not disclose the cost of the acquisition. Betty Labs was initially backed by Lightspeed Venture Partners and later by GV, Alphabet Inc’s venture capital arm, and Precursor Ventures. Last October, Betty Labs raised $9.3 million in seed funding led by GV.

“We are excited to join forces with Spotify and continue building the future of audio – we’ll invest more in our product, open the experience to Spotify’s audience, diversify our content offerings, and continue expanding the community we’ve built,” said Betty Labs founder and CEO Howard Akumiah.

Spotify has also been making a push into podcasting, and has spent hundreds of millions of dollars to boost its podcast range and debuted a podcast advertising marketplace.

Screenshots shared by a Twitter user last week showed Spotify was surveying some users about how often they used Clubhouse. Twitter Inc is also testing a live audio app Spaces, which it plans to publicly launch by April, and Facebook Inc is reportedly dabbling with its own live audio offering.

(Reporting by Elizabeth Culliford; Editing by Kenneth Li and Sonya Hepinstall)

Spotify Red Ink Could Trigger Selloff

Luxembourg’s Spotify Technology S.A. (SPOT) reports Q4 2020 earnings in Wednesday’s pre-market, with analysts expecting the European music service to report a loss of $0.55 per-share on $2.15 billion in revenue. If met, earnings-per-share (EPS) will mark a 50% loss reduction compared to the same quarter in 2020. The stock sold off more than 4% in October after missing Q3 top and bottom line estimates, even though revenue grew 14% year-over-year.

Profits Still Elusive

The musical disruptor is growing rapidly but not booking profits, posting losses in the last four quarters despite healthy revenue expansion. In turn, this failure is undermining bullish sentiment about the service’s long-term outlook. The pandemic has compounded this bearish view because, theoretically at least, lockdowns and stay-at-home orders should have super-charged Spotify’s earnings-per-share growth since March 2020.

Spotify invests in new markets that should generate healthy revenue streams in coming quarters but these initiatives will continue to pressure EPS in the short-term. It just launched the service in South Korea, which is the sixth largest musical market in the world. As the company noted in a Feb. 1 release, the share of K-Pop listening on the platform has increased by more than 2,000% since it debuted the first K-Pop playlist in 2014.

Wall Street and Technical Outlook

Wall Street consensus has deteriorated in the last three months, dropping to a ‘Hold’ rating, based upon 11 ‘Buy’, 1 ‘Overweight’, 10 ‘Hold’, and 1 ‘Underweight’ recommendation. More importantly, 6 analysts recommend that shareholders close positions and move to the sidelines. Price targets now range from a low of $310 to a Street-high $428 while the stock opened Tuesday’s U.S. session more than $23 below the median $363 target.

Spotify broke out above July 2020 resistance at 299.67 in December 2020 and posted an all-time high at 370.95 on Jan. 13. The stock closed at the 50-day moving average on Monday, after falling 16%, and bounced into the 340s in Tuesday’s session. The On Balance Volume (OBV) accumulation-distribution indicator topped out in July 2020 and has gone comatose since October, suggesting that short-term catalysts will generate out-sized reactions.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Spotify Could Offer Profitable Pullback Play

Spotify Technology S.A. (SPOT) sold off in October after missing Q3 2020 top and bottom line estimates, booking a loss of €0.58 per share on 14.1% year-over-year revenue growth to €1.98 billion. Buyers returned in November in reaction to a host of initiatives that included the acquisition of a podcast advertising platform, 2021 South Korean launch, and Spotify 2020 Wrapped, providing a year-end review of the user’s ‘listening moments’.

Impressive User Growth

Investors also shook off the bad quarter due to impressive growth metrics, with monthly average users (MAUs) rising 29% year-over-year to 320 million, above the top end of previous guidance.  North America and Europe provided the majority of users but the company also reported 30% growth in Latin America and 50% growth in the ‘Rest of the Word’, opening channels that will support higher advertising revenue in coming quarters.

Monness Crespi and Hardt Analyst Brian White raised his Spotify target from $310 to $380 on Wednesday, noting “After battling lackluster investor sentiment in 2018 and 2019, the Spotify story came to life in 2020 as its podcast push gained momentum and the value of the platform became better appreciated, resulting in a reinvigorated stock. We believe Spotify has further upside and are raising our 12-month price target.”

Wall Street and Technical Outlook

Wall Street consensus is mixed due to quarterly losses, with a ‘Moderate Buy’ rating based upon 9 ‘Buy’ and 5 ‘Hold’ recommendations. More importantly, three analysts believe Scottify is over-valued and recommend that shareholders close positions. Price targets currently range from a low of $181 to a Street-high $380 while the stock opened Wednesday’s session more than $25 above the median $294 target. Positive catalysts may be needed to support higher prices, given this placement.

Spotify broke out above 2018 resistance near 200 in June 2020 and stalled just below 300 in July. It broke out above that resistance level in December, after failed September and October attempts, and posted an all-time high at 346.77 on Dec. 11. Price has been pulling back in a flag pattern since that time and could offer a buying opportunity at breakout support, which has narrowly aligned with the 50-day moving average.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Spotify On The Defensive After Mixed Quarter

Luxembourg’s Spotify Technology S.A. (SPOT) posted a fiscal Q3 2020 loss of €1.91 in July, much worse than €1.45 estimates. Revenue at the digital entertainment upstart increased 13% year-over-year to €1.89 billion, which also missed consensus expectations. Monthly Average User (MAU) statistics offered a bright spot in an otherwise bearish quarter, growing  29% year-over-year, but inline Q4 guidance gave sidelined investors no reason to jump on board.

Spotify Posts Three Quarterly Losses in 2020

The streaming service has posted losses in the last three quarters even though revenues have booked double-digit growth. In turn, this is raising doubts on Wall Street about long-term profitability. This is especially true after a pandemic wave that, theoretically at least, should have underpinned earnings-per-share expansion, due to quarantine and stay-at-home orders that gave potential customers more time to access all sorts of entertainment offerings.

Spotify filed an anti-competitive complaint against Apple Inc. (AAPL) in 2019, alleging the 30% fee demanded by the tech giant to display the app “tilted the playing field”’ by “placing unfair restrictions on marketing and promotions that benefit consumers.” Messaging app Telegram joined the complaint last month, at the same time that popular video game Fortnite was removed from the Apple Store after parent Epic Games attempted to bypass the fee. Apple Music just added global offerings that appear, at first glance, designed to punish the company for the filing.

Wall Street And Technical Outlook

Wall Street consensus rates the stock as a ‘Moderate Buy’ based upon 12 ‘Buy’, 7 ‘Hold’, and an awkward 4 ‘Sell’ recommendations. A wide range of price targets highlights broad disagreement among analysts about Spotify’s long-term outlook, with a low of $172 and a street-high $357. The stock is currently trading about $13 above the median $266 target in a placement that will make it harder to add to gains in the third quarter.

Spotify posted an all-time high at 299.67 on July 22 and sold off into the 240s in mid-August. Those extremes now mark the edges of a broad trading range that may contain price action into the fourth quarter, when investors will get another look at the company’s balance sheet. Accumulation-distribution readings haven’t budged since topping out at a new high a few days after price, reinforcing a holding pattern that reflects growing caution.