How to Invest in Spotify
Spotify is the biggest music streaming service in the world. Read on to learn how to invest in Spotify and if it's right for your portfolio.
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Have you ever thought about investing in Spotify? As the leading music-streaming industry with a 30.5% market share and increasing revenue, it's no surprise that many are considering buying stocks in the tech giant.
Spotify has also been making headlines lately, from its successful IPO in 2018 to its recent Q1 2023 earnings increase of 55%.
But does it mean that Spotify is a good stock to buy? In this article, you will learn how to invest in Spotify and the important factors you must check before investing.
Is Spotify on the stock market?
Yes, Spotify started to trade publicly in 2018. It listed on New York Stock Exchange (NYSE) under the ticker symbol 'SPOT'.
As of May 2023, Spotify's stock price is $138.43, with an average of 103.97 in the past 52 weeks. Its highest stock price was $364.59 on February 2021.
Now, here's how you can buy Spotify stock.
How to Buy Spotify Stock
You can buy Spotify stock using any brokerage or trading app. There are no special qualifications needed.
Here are the steps to invest in Spotify:
20 Free Fractional Shares
Open a new Webull individual brokerage account. Make a single initial deposit of $500 - $1,999.99 during the promotional period to get 20 fractional shares, each valued between $3 - $3,000. Maintain a balance of $500 - $1,999.99 in the account for 30 days or more. Terms and conditions apply.
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1. Create an Account with a Brokerage
Before you can start investing in Spotify, you will need to create an account with a brokerage firm or trading app. You can visit the brokerage's website or app and follow the instructions there to set up your account.
Typically, you'll need to provide:
- Your name
- Social security number
- Address, phone number, and email
- Date of birth
You may also need to provide a copy of your driver's license or passport to verify your identification.
Don't have a ton of money to invest? Look for a brokerage that supports fractional shares. This means you can purchase just a tiny piece if you don't have enough money for a full share. This lets you to still invest in Spotify even if you only have $10.
Deposit $100 and Get $10 from eToro USA LLC
- Sign up for an eToro account
- Deposit $100
20 Free Fractional Shares
Open a new Webull individual brokerage account. Make a single initial deposit of $500 - $1,999.99 during the promotional period to get 20 fractional shares, each valued between $3 - $3,000. Maintain a balance of $500 - $1,999.99 in the account for 30 days or more. Terms and conditions apply.
- Taxable: A general-purpose investment account
- Joint: An account shared between two individuals
- Retirement (includes Traditional and Roth IRA)
- 529 College Savings
- Custodial: An account set up for a minor
Keep reading for our top recommended brokers to buy Spotify stock.
2. Fund Your Account
Once your account is created, you will need to fund it to start trading. Just link it to your bank account so you can transfer money. Depending on the brokerage, you may need to deposit a minimum amount to start trading.
Be sure to read through the terms and conditions of the platform carefully before making any investments.
Now, you can start investing in Spotify stock.
3. Search for Spotify (SPOT)
Once you've funded your account and are ready to buy, search for Spotify stock using their ticker symbol 'SPOT'.
The company should appear, along with Spotify's other relevant data, such as current stock price and daily average volume.
Click on the company listing for more detailed information, including news updates and analyst ratings. It's smart to research the company and consider any risks before investing.
4. Decide How Much to Buy
The next step is deciding how much Spotify stock you want to buy. Most platforms will let you enter how many shares or the exact dollar amount you want to buy.
For example, if the investing app allows for fractional shares, you can say you want to buy $50 worth of SPOT (instead of full shares).
After entering the details, you are now ready to place your order.
5. Place your order
Once you have entered all the information, review it one last time and click 'place order' to complete your purchase of Spotify stock. Your order will be processed in a few minutes, and you will receive a confirmation when it has gone through.
- Market order: Execute the transaction now at the current market price.
- Limit order: Set a specific price at which you wish to buy. This gives investors more control. But if the stock never hits your price, the trade will never be executed.
After that, you can view your holdings in your account portfolio and track their performance over time.
Best Brokerages to Invest in Spotify
Deposit $100 and Get $10 from eToro USA LLC
- Sign up for an eToro account
- Deposit $100
J.P. Morgan Self-Directed Investing - Get Up to $700
- Get up to $700 when you open and fund a J.P. Morgan Self-Directed Investing account with qualifying new money.
- $700 when you fund with $250,000 or more
- $325 when you fund with $100,000-$249,999
- $150 when you fund with $25,000-$99,999
- $50 when you fund with $5,000-$24,999
- Get unlimited commission-free online stock, ETF, fixed income, and options trades when you open an account.
- $0 Online Commission trades
- Choose an account that's right for you: General Investing, Traditional IRA or Roth IRA.
- Access our secure, easy-to-use trading experience online or through the Chase Mobile® app.
- Our powerful tools and resources are built to help you take control of your investments.
INVESTMENT AND INSURANCE PRODUCTS ARE:
Why Invest in Spotify
In April 2023, Spotify announced it reached a major milestone, surpassing 500 million users. This is a huge achievement for the company and will help drive even more future growth. The company also launched its first-ever podcast subscription service, which users have well received.
Additionally, Spotify has invested heavily in voice technologies, launching its voice assistant and integrating Alexa and Google Assistant into its platform.
- Monthly active users grew 22% to 515 million due to strong performance in all markets and age groups.
- Premium subscribers increased by 15% year-over-year to 210 million, with strong growth in all regions, mainly Europe and Latin America.
- Revenue increased 14% year-over-year t to €3.0B, driven by subscriber growth.
- Gross Margin improved to 25.2% due to better profits in music and podcasts.
- Operating loss: Expenses were reduced, resulting in an operating loss of €156 million.
Leading investing analysts suggests that Spotify is a good buy with its recent earnings. Some say that investors in the tech industry usually focus on profits than revenue growth. However, the recent trading for Spotify is different.
If you are not yet convinced, read on to know more on the current performance of Spotify stock.
What is Spotify's valuation?
Spotify's current market capitalization is $26.71 billion, making it one of the world's most valuable streaming music companies. The company has seen strong growth over the past few years and is expected to continue to gain value as they expand their services.
In addition, analysts believe its price/earnings (PE) ratio of -134.212 indicates that Spotify is undervalued and has room for growth in the coming years.
To better understand, here are two common ways that investors measure the value of a company.
- Market Capitalization (Market Value)
Market capitalization (Market value) is how we measure the size of a public company. We do this by multiplying the current stock price by the number of shares outstanding. - Price to Earnings Ratio (PE Ratio)
The P/E ratio shows if a company is undervalued or losing money. Low but positive means high earnings, while high negative means heavy losses.
- Companies with a P/E ratio above 30 or in the negative range are often labeled as "growth stocks." This suggests that investors predict future growth or profitability.
- While positive P/E ratio below 10 are generally regarded as "value stocks," indicating that the company is already profitable and unlikely to see significant growth in the future.
Are you having second thoughts on Spotify stock? Or do you simply want to diversify your portfolio? Try also investing in Apple Music or Amazon. Here's a quick review of these companies.
Alternatives to Spotify Stock
- Apple Music (NASDAQ: AAPL)
Apple Music is a streaming service offered by Apple, accessible via iTunes and iPhones. According to their latest report, Apple Music generated around $8.3 billion in revenue and had 88 million subscribers in 2022.Apple Music has more subscribers than Spotify in the United States, but Spotify has more in Europe and South America
- Amazon Music (NASDAQ: AMZN)
Amazon Music is a streaming service offered by Amazon, which is available on their network of devices, including Echo and Fire TV. It may have a smaller user base than competitors, but it is the US's most widely used streaming service.Amazon Music has experienced significant growth in the last year, with a more than 50% increase in subscriptions to Amazon Music Unlimited and over 55 million customers worldwide.
Bottom Line
Investing in Spotify is a risky venture. Before investing money, understanding the company's financial position and track record is important. Additionally, it's important to consider other alternatives, such as Apple Music and Amazon Music, when deciding whether or not to invest in Spotify.
While Spotify may have high future growth potential, there is no guarantee that its stock will appreciate over time. As with any investment, it is important to do your own research and consult with a financial advisor before making any decisions.
References
- ^ Spotify. Spotify Reports First Quarter 2023 Earnings, Retrieved 5/2/2023
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