Stay growthy: Why Spotify is so keen to show that it is still a "growth story"

2/23/21 7:00PM

Spotify tried to make one thing very clear to its investors this week: that it's still in its "growth" phase.

On Monday Spotify announced plans to move into 85 new markets, mostly in Asia, Africa, the Pacific and the Caribbean, as well as announcing a new premium subscription with "higher quality" audio. According to the Swedish streaming giant, those new markets should open the company up to more than 1 billion new potential customers.

‍Growth, growth, growth

‍If you read last week's newsletter you'll have noticed that at a quick glance this chart looks a lot like the Shopify one from Friday. But, despite similar sounding names, SHOP and SPOT are in very different places. For Spotify its growth has slowed down to a healthy, but not outrageous, 16%. That's why the announcements on Monday feel so important for the company.

Reiterating the message, that Spotify is still very much a growth company, is clearly the top priority for Spotify management. If investors begin to see Spotify as a lower growth business, they'll need to see profits to justify owning the shares — which isn't something Spotify has been good at producing in the last decade, reporting a net loss in every single year since 2011.

‍The big podcasts bet

‍Last year 55% of Americans reported that they have listened to a podcast, up from 51% the year before. It's no surprise then that Spotify has also doubled down on its big podcasts bet, unveiling a raft of new exclusive podcasts featuring big names such as Barack & Michelle Obama, Bruce Springsteen and Ava DuVernay.

Max Knoblauch8h

American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

American Airlines updates bag fees and Basic Economy fares

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Max Knoblauch9h

Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.