Spotify tumbles 13%–15% on guidance

Spotify shares fell 12.4% on April 28 after the company’s second-quarter subscriber and profit outlook came in below Wall Street estimates. (finance.yahoo.com) (cnbc.com) The stock closed at $434.20, down $61.62 for the day, after Spotify said it expects 299 million premium subscribers in the current quarter. (finance.yahoo.com) (cnbc.com) Analysts polled by FactSet had expected just over 300.4 million premium subscribers, and Spotify guided operating income to €630 million versus roughly €680 million expected. (cnbc.com) (forbes.com) That overshadowed a quarter that was otherwise solid. Spotify said first-quarter premium subscribers rose 9% year over year to 293 million and monthly active users climbed 12% to 761 million. (newsroom.spotify.com) Revenue reached €4.5 billion in the first quarter, gross margin improved to 33%, and operating income hit €715 million. (newsroom.spotify.com) For the second quarter, Spotify said it expects 778 million monthly active users, which was slightly ahead of Wall Street expectations, but the market focused on the slower paid-subscriber target. (cnbc.com) The guidance arrived after Spotify raised U.S. Premium prices in January, with the Individual plan moving to $12.99 a month starting with February billing dates. (newsroom.spotify.com) Bloomberg reported the selloff was Spotify’s biggest in more than four years, a sign that investors wanted stronger proof that higher prices would translate into faster profit growth. (bloomberg.com) Spotify said in its earnings materials that second-quarter guidance is “subject to substantial uncertainty.” By the close, that caution had wiped out more than a tenth of the company’s market value in one session. (cnbc.com) (finance.yahoo.com)