Spotify's competitive lead is faltering due to Apple Music; caution warranted in short/medium term regarding growth, but long-term execution capability prevents a bearish thesis.

Spotify faced a difficult year. you know that Spotify is a stock we have been optimistic about for a very long time . For years, Spotify has enjoyed a huge advantage over all competitors.

The AI-powered DJ seemed magical at the time, I think because it provided personalized playlists, really made you part of the system, and connected you to it via personal data.

It is an exceptional company, and an exceptional product.

But what we are seeing now is that that lead is beginning to falter because they are finally facing very strong competition from the biggest player in the market, the company that owns the device in everyone's pocket.

So, we're looking at Spotify now. It has been the only significant player in the market for a very long time. Now they are facing serious competition in terms of functionality and ease of use from the device manufacturer itself.

This is a new scenario for Spotify. We'll see how the company responds, but I think it's appropriate right now to be cautious about Spotify's growth prospects .

I think their customers are very loyal, but there's always a new competitor knocking at the door, and in this case , it's the biggest and most powerful player in the market, which could mean trouble for Spotify.

Andy, you know that Spotify's story is amazing, and how they managed to start long after Apple, and essentially dominate the music market.

your data on consumer demand is worrying if you're a Spotify fan, because this jump in Apple is attention-grabbing, and probably something Spotify can't ignore, Andy.

Do they just do some of the things that Spotify does? Do they do any of them better? I ca n't imagine that they do things better than Spotify because this system is so much fun to use.

When we look at the subscription and cancellation processes in Apple Music, that is, people who say: "I want to subscribe to Spotify. I want to subscribe to Apple Music." In exchange for "I'm going to cancel Spotify, I'm going to cancel Apple Music."

When we put these two graphs together, they paint a rather bleak picture for Spotify because we see a huge increase in people’s interest in subscribing to Apple Music, and we see a huge increase in the number of people talking about canceling Spotify. Therefore, this combination is worrying .

And I, for that point, am a loyal Spotify user, and have loved it for years. It's the first button I press when I get into my car, and I absolutely love it; But the fact is that Spotify is not actually built into the device, and I think that is Apple’s big advantage in many different areas that it exploits very well .

Therefore, we are concerned about Spotify. I still think it's one of the best companies in the world. It's just that now they have to step up their performance even further, and push their boundaries even more in order to compete with the "bad boy" of the city, Apple.

Today, UBS is lowering its target price for Spotify stock. They remain optimistic about it. It has dropped to 675. They were close to 700, 690. They still have a "buy" rating. One of the reasons that worries them is the cost due to the platform's investments.

both of them. It worries us, but we still believe... sorry, we still believe that Spotify is one of the best companies in the world. We believe they are capable of competing with and overtaking Apple Music in the long run .

But they have to prove it, and they will have to invest large sums to do so, which could put pressure on profit margins in the future.

So, you know, I love the company. And I love the arrow. We used to love the arrow a lot. But now, we have begun to feel some anxiety. So, if I were a Spotify shareholder here, I would probably place a stop-loss order at 20% or 25% below the current price, and I would be watching this data regarding Apple Music's continued growth.

But, if this is a wave that will occur over a period of 6 to 9 to 12 months and Apple Music gets the users it is targeting, Spotify may be very well positioned to continue growing from there.

So, they have a very capable and large competitor entering this field. This causes concern in the short and medium term, but the company has proven that it can execute very well, innovate at a high level, and can continue to make its customers happy with the product and the subscription in the long term.

Therefore , it is definitely not a company to bet against. It's just that they are now facing slightly more competition than they have in the past few years.