Spotify’s Latest Podcast Deals Have Helped Drive Market Value Up 39%

Kim Kardashian West
Nathan Congleton/NBCU Photo Bank/NBCUniversal via Getty Images via Getty Images

Kim Kardashian West

Investors are bullish on the streaming service's plans with Kim Kardashian, Joe Rogan and Warner Bros.

Spotify’s hard push into the podcasting business, culminating this week with two major deals, is proving to be music to investors’ ears. Between Wednesday’s announcement of Spotify’s deal with Kim Kardashian West and Thursday’s (June 18) news of a multi-year, multi-project with Warner Bros., Spotify’s share price jumped 23% to an all-time high of $228.16 in midday trading before closing at $225.28.

Since Spotify announced its exclusive licensing deal with Joe Rogan for his podcast, The Joe Rogan Experience, on May 19, Spotify’s share price has soared 38.5% and lifted its market capitalization $12.41 billion from $30.02 billion to $42.43 billion. At that valuation, Spotify’s market value is more than twice as much as Warner Music Group, the lone major music group traded on a stock exchange, at $19.24 billion on Thursday, and considerably higher than Universal Music Group’s $33.3 billion valuation based on Tencent’s investment in March.

Thursday was the first day Spotify’s share price had surpassed $200 after Wednesday’s high reached $199.99. Overall market improvement can account for a small part of the gain -- the New York Stock Exchange has risen 6.2% since Spotify announced the Rogan deal.

A multi-year deal with Warner Bros. -- the studio, not the record label -- will give Spotify a slate of scripted podcasts utilizing characters from Warner’s DC Comics. Kardashian West will produce an exclusive podcast on criminal justice reform that will be distributed by Parcast, a podcast company Spotify acquired in 2019. Spotify did not disclose financial terms of either deal.

Podcasting could be the difference between streaming dominance and equal partnership with Apple and Amazon. Not only can podcasts improve the slim margins inherent to the music streaming business, exclusives have the potential to attract and retain subscribers when services no longer land exclusives with musicians. Signaling a shift in strategy, last year CEO Daniel Ek said that “audio -- not just music -- would be the future of Spotify.”

Deal-making has been commensurate with podcasts’ importance to the company. Last year, Spotify purchased The Ringer, and the popular Bill Simmons Podcast as a result, and landed a deal with Barack and Michelle Obama’s production company, Higher Ground, for a slate of exclusive podcasts. Two other acquisitions, Gimlet Media and Parcast, landed Spotify popular franchises but no well-known individuals.