At the opening of trading on Tuesday, Spotify shares lost more than 13% of their value. The reason was not only the first quarter results exceeding expectations, but also a cautious outlook for the coming months. Despite growth in revenue and user numbers, investors focused on the details of future indicators, which turned out to be less optimistic than the market had anticipated.
Spotify reported that first-quarter revenue increased by 8% compared to last year and reached €4.5 billion ($5.3 billion). The number of monthly active users grew by 12% to 761 million. Both figures were slightly above FactSet estimates. The number of premium subscribers rose by 9% to 293 million, representing a net increase of 3 million for the quarter.
Forecasts and market reaction
At the same time, the company expects the number of users to grow by 17 million in the second quarter, reaching 778 million. The forecast for premium subscribers is an increase of 6 million, to 299 million. However, FactSet analysts had expected a greater increase—to 300.4 million premium subscribers. Spotify specifically emphasized that these estimates come with significant uncertainty.
Expected operating profit for the second quarter was €630 million, also below market expectations (€680 million according to FactSet). These figures reinforced investor concerns about the company’s growth rate and profitability in the near future.
Tariff changes and stock dynamics
In an effort to boost profitability, Spotify has repeatedly raised the cost of its premium subscription. In February, the price in the US increased from $11.99 to $12.99 per month. Despite these measures, by the close of trading on Monday, the company’s shares were already down 14% since the start of the year.
A weak outlook for the second quarter was a key factor in the sharp drop in share prices. Investors continue to closely monitor how changes in pricing and company strategy affect subscriber trends and financial results.
