Spotify Stock Booms to a New High After TikTok Music Shutdown

TikTok Music’s shutdown plans entered the media spotlight yesterday with a confirmation that the standalone app, having only launched in 2023, would cease operating in November. As things stand, the precise reason(s) for the abrupt move are unclear. However, licensing hurdles, lingering friction from the TikTok-Universal Music impasse, and/or slower-than-expected TikTok Music adoption all come to mind as possibilities.

Spotify Technology closed at a record high Tuesday after TikTok said it is shutting down its music-streaming service, and was climbing again Wednesday.

The stock has been on a roll, trading higher 13 days in a row and reaching $380.36 at Tuesday’s closing bell, according to Dow Jones Market Data. in midmorning trading Wednesday, shares were up 0.6% to $382.42.

Why Spotify is booming?

Whatever factors led to the downfall of the streaming app, the news comes as a welcome surprise to competitors like Spotify, Apple Music, and Amazon Music. Had TikTok Music found an unexpected path to commercial success, its closure wouldn’t have mattered much.

However, given TikTok’s strong track record in music discovery and promotion, there was a clear opportunity to convert users into paying subscribers through the main app and drive long-term streams on specific tracks. Moreover, the service was active in key markets with significant growth potential, including Brazil, Indonesia, Singapore, Australia, and Mexico.

As previously noted, Spotify stock (NYSE: SPOT) has surged to new highs following the announcement of TikTok Music’s closure, reaching a record per-share price of $386.96 today. By the end of trading, SPOT settled at a best-ever closing price of $383.96, giving the company a market cap of $77.10 billion.

While these gains came shortly after TikTok Music’s shutdown news, it’s clear that other factors are contributing as well. Spotify continues to roll out popular AI tools, benefitted from rate cuts earlier in September, and numerous analysts are issuing bullish forecasts and price targets for the stock.

TikTok Music revealed plans to shut down

The U.S. House of Representatives has passed a bill that could ban TikTok in America. TikTok Music—available in Indonesia, Brazil, Australia, Singapore, and Mexico—will close on Nov. 28, according to the social-media platform. All account information and personal data will be automatically deleted.

“We are sorry to inform you that TikTok Music will be closing on 28 November 2024,” a notice on TikTok Music’s website reads. The service was available in Indonesia, Brazil, Australia, Singapore and Mexico.

Subscribers can continue using the service until November 28, at which point renewals will be automatically canceled, according to the notice. Users wishing to transfer their playlists to other streaming platforms must do so by October 28, while refund requests must be submitted by November 28.

“Our Add to Music App feature has already enabled hundreds of millions of track saves to playlists on partner music streaming services. We will be closing TikTok Music at the end of November in order to focus on our goal of furthering TikTok’s role in driving even greater music listening and value on music streaming services, for the benefit of artists, songwriters, and the industry,” Ole Obermann, Global Head of Music Business Development, TikTok said in a statement.