Last week, Amazon (AMZN) launched an ad-supported free streaming music service. When the news first broke last Monday, Spotify's (SPOT) stock was down over 5% at one point that day before closing down 4.4%. Clearly, the market got spooked that Amazon's entry into the free ad-supported streaming music business would have a negative impact on Spotify, which offers both a paid Premium ad-free tier and a free ad-supported tier.
I've been an Amazon shareholder for years, but I'm skeptical that this service will have any material negative impact on Spotify. Why?