Spotify's (NYSE:SPOT) business hasn't skipped a beat amid the COVID-19 pandemic. Its stock price has more than doubled year to date as investors catch on to how meaningfully its podcast investments could pay off over time. 

Let's recap 2020, dive into what's to come, and then determine whether the stock is still a buy.

2020 wrapped

Spotify has had a phenomenal year despite the pandemic. The company's total monthly active users (MAUs) were 29% higher at the end of September versus the prior-year quarter, and the midpoint of management's fourth-quarter guidance suggests more than 26% MAU growth for the year. Within that figure, management expects Premium subscribers to grow 23%.

One of the big stories of the past year has been the company's massive push into podcasting, specifically original and exclusive podcast content. This push began in earnest when Spotify spent 357 million euros ($436 million) to acquire the podcasting businesses Gimlet, Anchor, and Parcast in 2019.

A man sitting in a chair with his eyes closed listening to music with headphones on

Image source: Getty Images.

But Spotify took that to another level this year with the acquisition of The Ringer, a podcast and media company started by Bill Simmons. It later signed Joe Rogan's wildly popular program The Joe Rogan Experience to a multiyear deal that went exclusive with Spotify earlier this month. Kim Kardashian West and Michelle Obama were two other huge names that joined the platform in exclusive deals.

This hasn't gone unnoticed by podcast listeners. In 2020, Spotify has overtaken Apple as the most widely-used podcasting platform, according to MIDiA Research. This rapid success has undoubtedly contributed to increasing investor enthusiasm toward the stock.

What's to come

As we look forward to next year, we can probably count on more of the same out of Spotify. That should mean continued MAU and Premium subscriber growth as streaming audio adoption continues in the company's 92 existing markets -- and the service launches in new ones.

For example, Spotify launched in Russia and 12 other European regions last July. And the company just announced this month that the service will be launching in South Korea during the first half of 2021. For Spotify, South Korea is a large untapped market -- one of the last major ones remaining.

In addition, we should expect more original and exclusive podcasting content. As Spotify's user base continues to swell, and a growing percentage of users engage with its shows, the company is also going to have more ad inventory to sell to advertisers. On top of that, its Streaming Ad Insertion technology has the potential to meaningfully increase the value of podcast advertisements, which would boost the company's revenue and profitability.

Yet another opportunity is the potential for price increases in select markets, which management has been telegraphing lately. On the company's third-quarter earnings call, founder and CEO Daniel Ek said users have responded well to price increases in test markets. He went on to state, "So as a result, you'll see us further expand price increases, especially in places where we're well positioned against the competition, and our value per hour is high."

Spotify hasn't traditionally been thought of as a company with pricing power due to the existence of competing platforms like Apple Music, Amazon Music, and others. To the extent that view among investors changes, the company -- and the stock -- should benefit.

Is Spotify a buy?

Spotify stock has had a tremendous run in 2020, beginning the year at $150 per share and closing at $317 as of this writing.

Many investors would look at those gains and conclude they "missed out," but Spotify still has a tremendous amount of growth ahead of it, both on the top and bottom lines. The podcast advertising initiative can pay off long term thanks to the high profit margins on each incremental ad impression sold. And investors shouldn't overlook the company's opportunity to sell more promotional services to artists and labels. Some of those revenue streams have "software-type margins," according to Ek, which are far higher than the margins in the company's core business.

With a huge global addressable market, margin-enhancing opportunities, and strong prospects for price increases, there's a lot to like at Spotify over the next decade. Investors should still consider the stock a buy despite its triple-digit rally this year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.