Pink's Bottom Line on Media, Money and Sports

Spotify, consumer spending and NFL rookie quarterbacks

In today’s newsletter, I talk Spotify, consumer spending and NFL rookie quarterbacks.

MEDIA: Spotify User Growth

Spotify, the audio streaming behemoth, reported earnings today that fell below most Wall Street analysts’ expectations, but the company did report that the number of subscribers and monthly active users increased.

The company reported that the number of subscribers grew 27% last quarter compared to the third quarter of 2019, and that the number of monthly active users rose 29% last quarter compared to the third quarter of 2019.

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Spotify now says that globally it has 144 million subscribers and 320 million monthly active users.

It appears that the company’s strategy of adding a comprehensive slate of podcasts to its vast music offerings is attracting new users and subscribers.

Now, the trick for Spotify will be to retain and monetize that user base in a brutally competitive marketplace.

MONEY: GDP and Consumer Spending

As you might have already heard, the government reported today that the nation’s Gross Domestic Product (GDP) rose 33.1% on an annualized basis last quarter, topping most estimates and rebounding from a 31.4% decline in the second quarter.

While the headline number of 33.1% is encouraging, it does mean that last quarter’s economic output still falls short of pre-pandemic levels.

Within that GDP report, Personal Consumption Expenditures (PCE) rose on an annualized basis of 40.7%, which is also encouraging as consumer spending accounts for upwards of 70% of all economic activity in the United States.

It’s likely that a significant boost in PCE last quarter came from the fiscal stimulus package — the government’s CARES Act — implemented earlier in the year.

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However, that sharp increase in consumer spending is unlikely to persist for two key reasons.

First, the second wave of the coronavirus could cause more shutdowns and limit consumer mobility, both of which would curtail spending.

Second, no new fiscal stimulus package appears imminent, and it could take until January before a new one is implemented.

As such, unless there’s a sharp organic rebound in consumer spending, look for muted economic activity for much of the fourth quarter.

SPORTS: NFL Rookie Quarterbacks

When the Miami Dolphins play the Los Angeles Rams in an NFL game this Sunday, Miami rookie quarterback Tua Tagovailoa will make his first start.

Most considered Tagovailoa, who played college football at Alabama, as the top quarterback prospect in the 2020 NFL draft class until he suffered an injury last fall.

Still, the Dolphins selected Tagovailoa fifth overall in this year’s draft, behind first overall pick Joe Burrow of the Cincinnati Bengals and just ahead of the sixth pick, Justin Herbert of the Los Angeles Chargers.

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Both Burrow and Herbert are having some of the best seasons in recent memory for any rookie quarterback in the NFL, and both look like they will be their respective franchise’s starter for many years to come.

Miami has high hopes for Tagovailoa, and I think he will be just as good as Burrow and Herbert once he assumes the starting role for the Dolphins on Sunday.

As such, I now expect this year’s rookie class of Tagovailoa, Burrow and Herbert to emerge as arguably the best rookie class of quarterbacks since 2004 when Eli Manning, Philip Rivers and Ben Roethlisberger — potentially all future NFL Hall-of-Famers — were drafted.

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Jeremy Pink is former CEO of private-equity backed Broadcast Sports International where he led the company to a successful sale and exit during his tenure there. He is also a former CNBC television executive in New York, London and Singapore. Jeremy currently serves as an advisor or consultant to companies in New York, London and Hong Kong in the media, technology and financial tech sectors.

The information contained in this communication is strictly for general informational and entertainment purposes and is not meant to be construed as financial, investment, tax, or legal advice. This communication is not a solicitation to buy or sell any securities. I am not a financial advisor or offering professional advice of any kind. Users should not act upon the content or information found within this communication without first seeking professional advice appropriate for their individual situation. Decisions based on information contained in this communication are the sole responsibility of the user, and use of this communication and its contents constitutes an explicit understanding and acceptance of the foregoing disclaimers.

(Newsletter Editor: Karina Pink)