Spotify Technology S.A. (NYSE: SPOT) stock has rebounded over 7% in the past month and over 28% in the past three months after a bumpy ride in early October. The music streaming giant has been able to attract users to its platform after the implementation of podcast strategy.

The stock, which was down over 22% for the past three months in October, had been facing immense competition from the tech titans including Google (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), and Apple (NASDAQ: AAPL) as well as from other streaming players.

Spotify (SPOT) stock
Courtesy: Sara Kurfeß on Unsplash

However, the company continued to see exponential growth in podcast hours streamed. The early indications showed that podcast engagement is driving a virtuous cycle of increased overall engagement and significantly increased conversion of free to paid users. Also, the company’s business has performed strongly in recent third-quarter.

Spotify experienced an increase in the monthly active users aided by continued growth in the developing regions. The users were attracted to podcasting as engagement remained a growing global phenomenon. The company saw increased engagement and increased conversion from ad-supported to premium as music listeners engage in podcasts.

The stock, which is on the upward track now, is likely to reflect the company’s business performance. The company has been utilizing its investment and focus on the podcast. This has reflected in lowering costs, lifting user loyalty, and increasing pricing power with suppliers and users.

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For the third quarter, the company posted better-than-expected earnings and revenue. Monthly active users (MAUs) grew 30% year-over-year to 248 million for the third quarter. For the fourth quarter, the management expects the number of monthly active users to be in the range of 255-270 million with the premium subscribers to be 120-125 million.

The market experts believe that podcasting could drive the company to profitability. The podcast segment could experience expansion in voice devices, wider availability on streaming services, and integrated applications in cars. In the future, the radio will be replaced by the streaming services with podcasts.

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