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Autocallable Multi Barrier Reverse Convertible on Music Streaming

The music streaming industry has been enjoying strong growth driven by a global shift away from CDs, radio and digital downloads, towards online music streaming services.

The global music industry peaked in size in 1999, and declined by two thirds over the 15 years thereafter primarily on the back of online piracy. However, it bottomed out in 2015, with streaming picking back up its growth since then. In fact, revenues have been growing at its fastest rate in over two decades, with meaningful contributions by both big tech – Apple Music, Amazon Music and Google Play Music, and streaming disruptors such as Spotify.

As of Q1 2019, Spotify has 217 million monthly active users, 100 million of which are paid subscribers. With non-paid accounts that work with an ad-based service, Spotify stands to gain revenue from both paid and free accounts.

Apple music has 56 million monthly active users, tripling since December 2016. Apple could potentially develop bundles with several of its services in order to boost sales across the board.

Amazon Music has 35 million active users and at a y-o-y growth rate of 17.7% , it is expected to grow faster than any other digital audio service. 

Google play music and Youtube music, which are both owned by parent company, Alphabet, have a total of 15 million users and this number is rising. Youtube music subscription numbers grew by 60% in the year between March 2018 and March 2019.

With impressive growth rates at hand, investors looking to generate yield from companies that are expected to benefit from this trend, could consider our Autocallable Barrier Reverse Convertible on Spotify, Apple, Amazon and Google currently in subscription.

Product Mechanisms

  • The invested capital is protected at maturity up to the knock-in barrier at 65%.
  • If the worst performing underlying closes above the barrier at maturity, investors receive 100% of the investment back, otherwise investors receive an amount equal to the closing price of the worst performing underlying relative to its initial value

 

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