Tech

Spotify's stock drops almost 5% after Amazon expands free music service

Key Points
  • Spotify shares fell 4.9% on Monday after Amazon announced that its free music service will be available on more devices.
  • Amazon now lets users listen to its ad-supported service on the iPhone, Android devices and Fire TV. It was previously only available on Amazon Echo.
  • Spotify said last month that the number of premium subscribers rose 26 million in the past year to 113 million at the end of September.
A trader during the Spotify IPO at the New York Stock Exchange, April 3, 2018.
Lucas Jackson | Reuters

Spotify shares dropped 4.9% on Monday after Amazon announced that its free music service will now be available on more devices.

Amazon Music listeners can now access the ad-supported service on the iPhone, Android devices, web and on Fire TV. Previously, it was only available through the Amazon Echo. Amazon's free music tier consists of playlists and radio stations and is more similar to Pandora than to the paid version of Amazon Music, which competes with Spotify and Apple Music.

Spotify dropped $7.25 to $140.26 at the close. Last month, the company announced that it had turned a surprise profit in the third quarter. In that report, Spotify said the number of premium subscribers rose 26 million in the past year to 113 million people at the end of September.

Spotify has 248 million monthly active users, including people who don't pay for premium subscriptions. The company predicted that number would grow to between 255 million and 270 million in the fourth quarter.

Amazon Prime customers get access to more than 2 million songs ad-free as part of their membership but can upgrade to Amazon Music Unlimited for $7.99 per month (or $9.99 for customers who don't pay for Prime). Amazon also recently introduced Amazon Music HD, which costs $12.99 a month for Prime subscribers and $14.99 for others. It provides higher-quality music, including new 3D audio that works with the Echo Studio.

WATCH: Spotify outperforms Q3 earnings with more premium subscribers

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Spotify outperforms Q3 earnings with more premium subscribers