Technology

The Zacks Analyst Blog Highlights: Alphabet, Apple, Amazon and Spotify

For Immediate Release

Chicago, IL – March 28, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Alphabet GOOGL, Apple AAPL, Amazon AMZN and Spotify SPOT.

Here are highlights from Wednesday’s Analyst Blog:

Music Streaming Space Turns It Up: Google, Amazon & Others to Watch

 The ever-changing landscape of this data-driven world has created a unique niche for music streaming services. Moreover, the increasing penetration of Internet and smartphone usage is fueling demand for such services.

Additionally, the uninterrupted access to high-quality audio files, without the need for downloading which generally takes up time and phone memory, is a key catalyst.

Given the upbeat scenario, we believe the music streaming market has immense prospects which are attracting major companies.

Currently, the key players in this market include the likes of Alphabet’s Google, Apple, Amazon and Spotify.

These companies are trying all mean to make a mark in the music streaming space, which is expected to generate $11.1 billion revenues in 2019, per a Statista report.

The figure is expected to rise to $13.1 billion at a CAGR of 4.1% between 2019 and 2023. Further, user penetration is 14.7% for 2019 which is likely to be 16.1% in 2023.

According to Absolute Market Insights report, demand for music streaming services is expected to see a CAGR of 17.9% globally by 2027.

Key Driving Factors

Apart from an expanding smartphone user base, rapid adoption of AI-backed smart speakers is aiding the proliferation of music streaming services.

A survey conducted by AudienceNet on 3,000 people in 2018 showed that 14% owned smart speakers out of which 43% availed on-demand music streaming services and 37% opted for subscription-based music services on the speakers.

Further, a growing momentum of wearable technology is acting as a tailwind. Rising popularity of smartwatches and the synchronization of music streaming apps with these are driving the download rate of such apps.

Growing Global Penetration

Increasing availability of music streaming services also supports the fact that the total addressable market for these services is expanding.

According to data from Statista, the user penetration rate in the United States is the highest at 56% for 2019 and is expected to hit 59.3% by 2023.

Further, the music streaming service providers are gaining traction in countries like the United Kingdom, Canada, Japan, China and India where the user penetration rate is pegged at 26.1%, 25.7%, 19.8%, 18.7% and 6.5%, respectively.

The same metric for these countries is projected at 30%, 26.9%, 21.6%, 20.4% and 7%, respectively, for 2023.

Stocks to Watch

With the increasing adoption of music streaming services, we believe the following stocks are worth a look.

Alphabet’s Google has been making advances in this market over the past few years. The company’s latest on-demand music streaming service called YouTube Music is aiding its momentum in the market by leveraging the popularity of YouTube and capabilities of its machine learning techniques.

Additionally, its strong focus on expanding global footprint is a major positive. Recently, Google rolled out YouTube Music in India, which is an emerging market for such services. Excluding this, the service is available in 17 countries including the United States, Australia, Canada, U.K. and Mexico, to name a few.

Further, the company continues to gain from its Google Play Music which offers on-demand music streaming service apart from allowing users to listen to songs from the downloaded library. The service is likely to be replaced by YouTube Music which will boost its adoption rate further.

Currently, Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amazonforayed into the music streaming market with Amazon Music Unlimited, which is a premium subscription service available on the Amazon Music app. It offers tens of millions of songs and thousands of expert-programmed playlists and stations. The service is available on iOS, Android, Mac, PC, Fire TV and Echo devices.

The e-commerce giant offers this service to more than 40 countries such as the United States, Canada, India, Sweden, Netherlands, Greece, Hungary and Costa Rica, to name a few.

Additionally, Amazon leverages the popularity of Prime and its ever-expanding subscriber base to strengthen presence in the music streaming space. The company offers Amazon Prime Music exclusively for Prime members at no additional cost.

Currently, Amazon carries a Zacks Rank #3.

Appleis also gaining steam in the market with the expanding Apple Music subscriber base, which stood at 56 million as of fourth-quarter 2018. Further, its availability on Google Play is a major plus. Per data from SensorTower, the install base of Apple music on Adnroid smartphones crossed the 40-million mark recently.

Additionally, the iPhone maker is gaining from partnerships. Its tie-up with Verizon (VZ) has made Apple Music available for free to its customers. Further, the service is available on Echo smart speakers owing to Apple’s partnership with Amazon.

We believe these partnerships will continue strengthening Apple’s subscriber base, which in turn will boost this Zacks Rank #3 company’s market position.

Spotifyis benefiting from premium subscriber growth. Its solid focus on personalization of playlists enhances the music experience for users.

Further, its Family and Student plans are aiding its momentum across its customers. Spotify’s global footprint expanded to 78 countries as of fourth-quarter 2018. Additionally, the company recently forayed into India, which holds more promise.

Its continued focus on strengthening global presence and synchronization with Google Home products are likely to aid growth in monthly active users (MAU). For 2019, this Zacks Rank #3 company’s MAU is expected to see growth of 18-28% from 2018.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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