Spotify stock plunges on middling user growth projections

The Spotify logo on a smartphone arranged in Saint Thomas, U.S. Virgin Islands, on Saturday, Jan. 29, 2022.

Gabby Jones | Bloomberg | Getty Images

Shares of Spotify plunged as much as 18% in after-hours trading Wednesday after the streamer reported fourth-quarter earnings. The numbers mostly beat expectations, but projections for user growth in Q1 were barely in line with analysts’ projections. There was also a broader selloff in tech shares after the bell, after Facebook (Meta) reported disappointing earnings.

Here are the key numbers:

  • Loss per share: €0.21 vs €0.43 expected, per Refinitiv
  • Revenue: €2.69 billion vs €2.65 billion expected by Refinitiv

The streaming company posted 406 million monthly active users in the quarter, up from 381 million. That’s in line with its guidance of 400 million to 407 million and slightly beat analyst expectations, per StreetAccount. Spotify’s premium, or paid, subscribers grew 16% year over year to 180 million in the quarter, the company said. Spotify cited strong promotional campaign performance.

In the first quarter of 2022, Spotify expects to report 418 million monthly active users. Analysts anticipated guidance of 417.8 million, according to StreetAccount. It expects to report 183 million total premium subscribers.

The company added that “since the vast majority of our initiatives are multi-year in nature and measured as such, we no longer plan to issue annual guidance.” For quarterly guidance, the company said it would provide a “single estimate for each metric instead of a range of outcomes.”

The company’s ad-supported revenue benefitted from strong demand. Spotify said that ad-supported revenue reached a record 15% of total revenues in the quarter.

Spotify reported a double digit increase in the number of monthly active users that engaged with podcasts in the quarter.

The company made no mention of the ongoing controversy over podcaster Joe Rogan in its report, which has led musicians to pull their music from the platform. At the end of the quarter, it had 3.6 million podcasts on the platform, compared to 3.2 million the quarter prior.

This is a developing story. Please refresh for updates.

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