Ca$htag$: Consumers Tuning Out SPOT in Favor of AAPL

I'm Diane King Hall alongside Kevin Hanks over at the Cboe. Time now for our cash segment. For that let's bring in next guest. And as wan co-founder of like folio with with fresh sentiment data Spotify t Andy shares of Spotify have had a tough road this year. You got new sentiment data on Spotify. Are the people still tuning in? Is the question. That is the question. And Spotify is a stock that we have been bullish on for a very long time. They've they've forears. Spotify has had an enormous edge over all competition. It's AI DJ felt magic at the time, I think because it was had custom playlists really built you into the system, locked you into the system, personalized data, just a phenomenal company, a phenomenal product. But you know, we're seeing now is that that lead is cracking because they're finally getting very competent competition from the biggest player in town, the company thatwns the device and everybody's pocket, of course, that is Apple. So this is the first time we've really recorded what I would call serious improvement from Apple itself. They've rolled out AI playlists in the spring. Youn sr interest for AI for Apple Music since that. And I thi the biggest part of story is that it wasn't just a blip. You know, Apple pushed out these new features, saw a hugesm consumers. And that demand growth sustained at a very high level. And so, you know, we're looking Spotify now, was r in town thatred for a very long time. And now they're getting serious competition from a functionality usability standpoint from the device manufacturer itself. that's a new scenario for Spotify. We'll see. We'll have to see how the company responds. But I think right now it's appropriate to be cautious on Spotify's growth prospI think the customers tha have are very are pretty loyal, but there's always a new player on the doorstep. And in this case, it just happens to be the biggest, baddest player in town, which could spell trouble for Sp Andy, you know, thi is an amazing story of Spotify and how they were able to start much after Apple basically take over music. I am a loyal, happy Spotify user, but your data on consumer demand is alarming if you're a Spotify fan, b that jump in Ale is something that catches your attention,andg that Spotify can't ignore. Andy, what do you think itas? Are they just doing some of the things that Spotify is doing? Are they doing any of them better? Ian't imagine they're they're doing things better than S because this system is so fun to use. What is Apple doing that made such a big jump in their in their demand? I don't think that thdoing anything, you know, extraordinarily special. That's beyond what Spotify does. But the big advantage Apple has is that it's already on the Apple m is already there. It's not something that you have to go downloa pay for to a separate company. And whe look at, you k Apple Music signups and cancel searches, so people saying, I want to sign up for Spotify, I want to sign up for Apple Music versus I'm going toancel Spotify. I'mng to cancel Apple Music. When we put those two charts together, it really does paint a little bit of a dire picture for Spotify, because we're seeing a huge surge in int for peoplenting toe Music, and we're seeing a pretty large increase in number of people talking about canceling Spotify. So that combination is concerning. And I don't know, to your point, I'm a Spotify loyalist, have loved it for years. It's, you know, the first button tha push when I get my car and I, I absolutely love it. But the fact is Spotify is not, you know, integrated into the device already. And I think that's Apple's, you know, big advantage in a lot of different areas they exploit really well. A lot of times they're late to the game, like in this case specifically, but eventually they get there and they have the distribution to win. So, you know, we're concerned about Spotify. Iill t. It's just now they have to stepd push the envelope even more in order to compete wit you know, the bad boy in town, Apple. So Kevin asked one of the things that came to mind, because I was won who was, you know, of s, what was the reason for Apple ve Spotify? Because, you know, when I think about listening, honestly, the first thing I think about is Spo over Apple. UBS today is lowering its price target on Spotify. They're, they're still bullish on it. So just down to 675. They were close to 706 90. They sti a buy rating. One of the reasons they're worried about is cost because of platform investments. I'm sure this is something you've been paying attention to. You said you guys have been long term long term bullish on Spotify. Are you still or does this latest data concern you? Both. It con us, but we still think, excuse me, we still think Spotify is one of the best companies in the world. We think that they're capable of competing with and beating Apple Music over the long term,t and they're going to have to invest significant amounts of mone do that, which could put pressure on margins moving forward. So, y know, I love the company. I like the stock. We used to love the stock. Now we're getting a little bit concerned. So if I were if I were a Spotify, you know, shareholder here, I might, you know, pa stop loss 20 or 25% below where we are now.ep ar Apple Music continuingo gain. But if this is a wave that rs ov, 12 month period, and Apple Music gets the users t going to get, then Spotify could be in a very good position to continue to grow from there. So they have a ver ent, very large competitor coming into the space that's causing near-term mid-term concern. But the company has pven that it can execute really well. It can in at a very high level, and it can continue to make its customer thrilled with the product, thrilled with their subscription over tg term. So not a company to bet against, for sure. It's just now they've got a little bit more competition than they've hadr tl right. I would say longtime listener, f time caller, you're e listener and a longtime caller. I had to, Andy. All right. That's Andy