Spotify stock plunges on middling user growth projections
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The Spotify logo was placed on a smartphone in Saint Thomas, U.S. Virgin Islands on Saturday, Jan. 29, 2022.
Getty Images| Bloomberg | Getty Images
Shares SpotifyFollowing the streamer report, after-hours trade Wednesday saw a plunge of 18% fourth-quarter earnings. Although the numbers were generally better than expected, projections of user growth for Q1 were not in line with analyst projections. Tech shares also saw a larger sell-off after the bell. Facebook (Meta) reported disappointing earnings.
Below are some key numbers
- Share loss: €0.21 vs €0.43 expected, per Refinitiv
- Revenue: €2.69 billion vs €2.65 billion expected by Refinitiv
In the third quarter of 2018, streaming service Spotify saw 406 million active monthly users, an increase from 381 millions. StreetAccount estimates that the number is within its expectations of between 400 million and 407 million. Spotify’s premium, or paid, subscribers grew 16% year over year to 180 million in the quarter, the company said. Spotify highlighted its strong promotion campaign performance.
Spotify anticipates that it will report 418 million active monthly users in the first quarter 2022. StreetAccount reports that analysts had predicted a guidance level of 417.8million. The company expects to announce 183 million premium subscribers.
It stated that most of its initiatives were multi-year and therefore cannot be measured annually. According to the company, quarterly guidance will be provided by a “single estimate” for each metric and not an array of results.
Due to strong demand, the company saw a significant increase in ad-supported revenues. Spotify claimed that Spotify’s Ad-supported Revenue reached record levels of 15%, a significant increase from the previous quarter.
Spotify revealed a double-digit increase in users listening to podcasts each month.
In its quarterly report, the company did not mention the controversy surrounding Joe Rogan as a podcaster. This has caused musicians to remove their music from this platform. The company had 3.6million podcasts as of the end, down from 3.2 million in the prior quarter.
This is an ongoing story. Keep checking back for more updates.
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