COVID-19 will have a neutral impact on Spotify’s performance over the next 12 months

Following the news that Spotify has gained six million subscribers in the first quarter of 2020;

Wafaa Hassan, Thematic Analyst at GlobalData, a leading data and analytics company, offers her view:

“Spotify increased monthly active users by 31% in the first three months of 2020, but it faces challenges ahead due to the COVID-19 crisis.

“Brands across industries are cutting their budgets as a survival method during this crisis. Spotify said that COVID-19 had caused previously-booked business to be either cancelled or put on hold. However, the overall impact of COVID-19 over the next 12 months will be neutral.

“GlobalData has taken a cautious view on the impact of COVID-19 on Spotify. In our Music, Film, and TV Sector Scorecard, we have given the company a score of 3 out 5 for the coronavirus theme, suggesting that the pandemic will have neither a positive nor negative impact on Spotify’s performance over the next 12 months. Netflix, on the other hand, has received a score of 5 out of 5, suggesting that its performance will significantly improve over the next year as a result of COVID-19.

“Last week, Netflix announced that it had gained 15.8 million subscribers in the first three months of 2020. Both Netflix and Spotify rely on subscriptions, but Netflix does not derive revenue from advertising and so will not be affected as companies slash ad budgets.”

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