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How Long Can Spotify Continue to Grow Its Subscriber Base?

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Number of Premium subscribers expected to increase between 21% and 32%

Spotify (SPOT) has been a market leader in the music streaming space for a number of years. It has managed to hold its own despite competition from tech giants, including Apple and Amazon (AMZN).

At 28 million, Apple Music now has more paid subscribers in the United States than Spotify’s 26 million. However, in terms of global market share, Spotify still dominates the market.

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During Spotify’s fourth-quarter earnings call, the company’s management stated that it expects its number of total monthly active users to rise between 18% and 28% to between 245 million and 265 million in 2019. Its total number of Premium subscribers is expected to rise between 21% and 32% to between 117 million and 127 million this year.

Historical growth rate of Premium subscribers

In the fourth quarter of 2018, Spotify’s number of Premium subscribers increased 36% YoY (year-over-year) to 96 million. In the third quarter, its Premium subscriber base increased 40% to 87 million, while in the second quarter, its YoY growth was 40%, and its Premium subscriber base increased to 80 million. At the end of the first quarter, Spotify’s number of Premium subscribers had risen 45% to 75 million.

The sequential growth in Spotify’s premium subscriber base was 7% in the first quarter, 10% in the second quarter, 5% in the third quarter, and 11% in the fourth quarter of 2018.

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