BREAKING: Nasdaq Leads Heavy Selling As S&P 500 Hits 52-Week Low
Streaming music and podcast service Spotify Technology (SPOT) on Wednesday beat expectations for revenue and earnings in the first quarter. But its subscriber count and guidance came up short. Spotify stock fell hard on the news.
The Stockholm-based company added 2 million subscribers in the March quarter. Analysts had expected 2.57 million new subscribers. Spotify ended the period with 182 million paying subscribers worldwide. That includes the loss of about 1.5 million subscribers from the termination of service in Russia in response to that country’s invasion of Ukraine.
Spotify earned the equivalent of 24 cents a share on sales of $2.99 billion in the first quarter. Analysts polled by FactSet expected Spotify to lose 27 cents a share on sales of $2.8 billion. Spotify reports financial results in euros. In the year-earlier period, Spotify lost 30 cents a share on sales of $2.6 billion.
“We delivered another strong quarter in Q1 and when you exclude the impact of our withdrawal from Russia, we came in line or ahead on every metric,” Chief Executive Daniel Ek said in a written statement.
On the stock market today, Spotify stock plunged 12.4% to close at 96.67. Earlier in the session, it hit an all-time low of 95.75.
In the March quarter, Spotify tallied 422 million monthly active users, topping Wall Street’s target of 417 million. Spotify offers an ad-supported service in addition to its commercial-free subscription service. Its monthly active users rose 19% year over year.
It forecast 428 million monthly active users for the June quarter, in line with estimates.
Spotify expects to add 5 million premium subscribers for a total of 187 million in the June quarter. However, Wall Street predicted 6.5 million new subscribers, according to FactSet.
In the second quarter, Spotify expects to lose the equivalent of $209 million on sales of $2.97 billion.
Spotify stock has collapsed since hitting a record high of 387.44 in February 2021. It has a poor IBD Relative Strength Rating of 8 out of 99. That means that 92% of stocks have outperformed it over the past 12 months.
Spotify competes with streaming music services from tech conglomerates Alphabet (GOOGL), Amazon (AMZN) and Apple (AAPL). Block (SQ) unit Tidal is another rival. In international markets, Spotify competes with Tencent Music (TME), NetEase (NTES), Anghami (ANGI), Deezer and others.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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