Spotify's (NYSE:SPOT) stock price has held up relatively well since the S&P 500 peaked in February. While not entirely immune to the sell-off spurred by the impact of coronavirus, the share price is only down about half as much as the market index.

That suggests the market doesn't think Spotify will see as big of an impact on its business as many other sectors. Still, there's disagreement among analysts about whether the more modest sell-off presents a buying opportunity or not for investors interested in the streaming audio company.

Two weeks ago, Bernstein analyst Todd Juenger upgraded the stock, noting that Spotify is "perfectly insulated" from the impact of coronavirus. This week, Raymond James analyst Justin Patterson downgraded the stock, saying Spotify is seeing less engagement and fewer downloads from people staying at home.

So, is it a good time to buy Spotify shares or not? 

A woman wearing headphones and holding a smartphone

Image source: Getty Images.

Music engagement is dropping

There's no doubt people are listening to fewer songs than they did before coronavirus forced us to stay home as much as possible. Spotify saw listenership of its top 200 songs drop over 20% in Italy between March 3 and March 17, showing the impact of social distancing.

With fewer people commuting to work or going to the gym -- prime streaming hours -- Spotify is seeing lower music listening numbers. And Patterson suggests that with streaming shifting to the home, more people are likely listening on smart speakers such as Amazon's (NASDAQ:AMZN) Echo devices. As such, he believes Amazon's poised to win market share with its Amazon Music services, which integrate nicely with Echo devices.

Declining music listening is bad for Spotify, but it's not the worst thing in the world. About 90% of Spotify's revenue comes from subscriptions. Consumers are paying for those subscriptions regardless of how much they listen. It's unlikely very many subscribers will cancel just because they're listening to less music for now.

That said, Spotify may see a drop in conversions from its free service to its paid service because of lower engagement. The question is whether those free listeners will convert to paid subscriptions when listening habits return to normal. If people are discovering music streaming through their Amazon devices while they stay at home, it may be Amazon that converts those free listeners into paid subscribers.

Podcast listening is dropping, too

Spotify has invested heavily in podcasts over the last couple of years, but even the increasingly popular audio format is struggling to engage audiences at home. Genres such as news saw a spike in engagement in early March, but listenership fell off a cliff by the end of the month, perhaps due to fatigue.

Still, overall podcast listening is up for the year, and Spotify is grabbing a greater share of podcast downloads and streams. That should provide support for the streaming service as consumers gravitate toward the format.

Moreover, Spotify's investments in podcasting technology company Anchor could see increased interest amid social distancing as creators suddenly find themselves with a lot more free time. The environment could lead to a boom in user-generated content, and podcasting is an accessible format.

An increase in podcast content on Spotify's platform should provide a long-term boost for overall listenership. Spotify believes increased podcast listening leads to greater overall engagement and premium subscriptions. It's still working to prove causality.

Is Spotify a buy?

The shift in listening habits is no doubt a challenge for Spotify. Without prime listening hours such as work commutes and gym time, Spotify is seeing a drop in both music and podcasts. Still, the company is at the forefront of the biggest trend in music. 

While Amazon may have an advantage in home listening thanks to its smart speaker market share, Spotify's strength in podcasting should help draw in listeners in the long run when listening habits return to normal. If we see increased interest in podcast creation during social distancing efforts, that could be to Spotify's benefit as well.

The long-term story is still very much intact for Spotify. So, if you liked Spotify stock when it was around $150 per share, you should definitely like it around $120 per share.