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3 Stocks to Watch as Music Streaming Services Gain Traction

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While outdoor entertainment came to a standstill, music streaming saw a blowout 2020, thanks to the pandemic, which worked miracles for some industries. Much like video streaming, 2020 turned out to be a great year for music streaming service providers that gained both in terms of revenues and subscribers.

According to the latest report from the Recording Industry Association of America (RIAA), 2020 witnessed the biggest year-to-year leap for music streaming services. And the trend is likely to continue given that the pandemic is far from over and people are still frightened to visit outdoor entertainment spots.

Robust Year for Music Streaming Services

According to the report from RIAA, the music streaming industry saw more than 15 million new users buying subscriptions, reaching a total of 75.5 million subscribers across the United States in 2020.

More subscribers mean more revenues. In 2020, total revenues from recorded music increased 9.2% on a year-over-year basis to $12.2 billion. Revenues came in at $11.1 million in 2019.

 Of the total revenues generated from recorded music, streaming makes up for 83% of the revenues. Paid subscription now makes up for 64% of total revenues. Revenues from streaming jumped 13% year over year in 2020 to $10.1 billion. This includes revenues from paid subscriptions like Spotify, Inc. (SPOT - Free Report) and Apple, Inc. (AAPL - Free Report) , radio streamers and ad-supported music services like Alphabet, Inc.’s (GOOGL - Free Report) YoutTube Music.

Streaming Music Services Poised to Grow

Sales of CDs and DVDs have been on the decline for some time with music streaming fast eating into their revenues. That, however, hasn’t affected the music industry’s revenues. Streaming services are making up for the revenues, with thousands of new subscribers buying paid music.

Moreover, the pandemic has been working miracles for the industry. While live music concerts struggled in 2020, more people subscribed to music streaming services as they had not too many options for entertainment.

Our Choices

Music streaming giants are likely to see more subscriber additions in the near term given that the pandemic is far from over and people still have fewer choices of entertainment. Given this situation, it is the opportune time to invest in music streaming stocks.

Apple, Inc.’smusic streaming service isextremely popular. It reportedly had more than 72 million subscribers as of June 2020. It is the second largest music streaming service in the world.

The company’s expected earnings growth rate for the current year is 36.3%. The Zacks Consensus Estimate for current-year earnings improved 10.9% over the last 60 days.  Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amazon.com, Inc. (AMZN - Free Report) , besides being an e-commerce giant, offers several other services. Amazon Prime, a membership program, provides access to streaming of movies, TV episodes and music among other services, and is one of the market leaders in the streaming space. Amazon has more than 55 million subscribers for its music streaming services worldwide.

The company’s expected earnings growth rate for the current year is 18.2%. The Zacks Consensus Estimate for current-year earnings improved 0.4% over the last 60 days. Amazon carries a Zacks Rank #3 (Hold).

Alphabet is one of the most innovative companies in the modern technological age. Over the last few years, the company has evolved from being primarily a search-engine provider to a cloud computing, ad-based video and music streaming, autonomous vehicles and healthcare provider and others.

The company’s expected earnings growth rate for the current year is 17.8%. The Zacks Consensus Estimate for current-year earnings improved 10.7% over the last 60 days.  Amazon carries a Zacks Rank #3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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Amazon.com, Inc. (AMZN) - free report >>

Apple Inc. (AAPL) - free report >>

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Spotify Technology SA (SPOT) - free report >>

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