As peopled stay at home to help flatten the COVID-19 curve, music engagement on Spotify has dropped. Despite people having plenty of time on their hands, there are less people streaming music on Spotify. Raymond James analyst Justin Patterson has downgraded the stock due to less engagement and downloads.
Spotify saw listenership of its top 200 songs drop over 20% in Italy between March 3 and March 17. As less time is spent commuting, going to the gym, and other outside-the-house activities, music listening numbers have declined. However, 90% of Spotify’s revenue does come from subscriptions. This means that listening times won’t affect profit margins, as long as listeners are still subscribed.
Patterson also stated that Spotify music streaming rates in the United States have also dropped by double digits. Additionally, as people stay at home more, smart speakers such as Amazon’s Alexa are being relied upon more and some Spotify users may switch over to Amazon Music as a result.
A financial report for 2020 Q1 for Spotify will be delivered on April 29th, and there will be more information there, as well as answers to some stock investors’ questions and concerns.