Analysts React To Joe Rogan’s Spotify Deal: ‘This Is Undoubtedly A Coup’

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Spotify Technology SA (NYSE: SPOT) shares are up 15.8% this week after Joe Rogan announced he will be taking his popular “Joe Rogan Experience” podcast exclusively to Spotify.

On Tuesday afternoon, Rogan announced that his podcast will be available on Spotify starting Sept. 1 and exclusively on Spotify at the end of the year. The terms of the deal were not disclosed; the Rogan podcast is the latest in a series of moves Spotify has made to beef up its podcast streaming library in recent years.

The Wall Street Journal reported that Rogan’s licensing deal is worth more than $100 million over several years and includes all of his 11-year back catalogue of previous podcasts.

Rosenblatt Securities analyst Mark Zgutowicz said Rogan could immediately make an impact on Spotify’s numbers. Depending on how the deal is structured, Zgutowicz estimates Rogan could boost Spotify’s 2021 revenue by between 0.5% and 3.8%.

“We believe SPOT has been trying to lure Rogan to an exclusive deal since at least 2018; management mentioned JRE is the most searched for podcast on its site,” the analyst said in a note.

Rogan’s last 10 YouTube episodes have averaged 2 million views, excluding his interview with Tesla Inc (NASDAQ: TSLA) CEO Elon Musk, which drew more than 13 million.

Wells Fargo analyst Steven Cahall said the “Joe Rogan Experience” likely has 190 million monthly downloads and a CPM of around $50.

“This is undoubtedly a coup for SPOT to get such a big show on an exclusive basis, and is a big stamp on the size of the platform and potentially its emerging ad tech,” the analyst said.

The potential $100-million price tag represents about 1% off Spotify’s projected 2020 gross margin, but it’s difficult to determine how much Rogan’s exclusive content can boost user growth and music royalties, he said.

Rosenblatt Securities has a Buy rating and $190 price target for Spotify. Wells Fargo has an Underweight rating and $130 target.

Spotify shares were up 6.24% at $185.74 at the time of publication Wednesday.

Spotify certainly took a gamble in forking over a reported $100 million for Rogan. The bullish initial market reaction suggests investors believe the price tag was well worth it, but it seems analysts will first need to see how many of Rogan’s millions of viewers follow him to Spotify — and how much of a financial impact they will have.

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