Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Investors Business Daily
Investors Business Daily
Technology
PATRICK SEITZ

Spotify Technology Beats Subscriber Target But Losses Mount

Streaming music leader Spotify Technology on Tuesday beat estimates for new subscribers and total listeners in the second quarter but posted a larger-than-expected loss. Spotify stock plunged on the news.

On the stock market today, Spotify stock tumbled 14.3% to close at 140.38.

The Stockholm-based company added 10 million premium subscribers in the June quarter. Analysts had expected 6.9 million new subscribers. Spotify ended the period with 220 million total paying subscribers worldwide.

Also, Spotify tallied 551 million monthly active users in the second quarter vs. Wall Street's target of 529 million. Spotify offers an ad-supported service in addition to its commercial-free subscription service. Its monthly active users rose 27% year over year.

"Healthy top-line user growth is the leading indicator of our ability to achieve future success on all other financial metrics," Chief Executive Daniel Ek said in prepared remarks.

The audio entertainment service lost the equivalent of $1.70 a share on sales of $3.46 billion in the June quarter. Spotify reports financial results in euros. Analysts polled by FactSet had predicted Spotify would lose 70 cents a share on sales of $3.57 billion.

Spotify Stock News: Sinking Profit Margins

Spotify's gross profit margin dropped to 24.1% in the second quarter from 25.2% in the first quarter and 24.6% in the year-ago quarter.

For the current quarter, Spotify predicted 4 million net new premium subscribers. Also, it expects to reach 572 million total monthly active users in the September quarter.

On Monday, Spotify announced price increases for its music subscription service. It raised the price of its U.S. single-user plan by $1 to $10.99 a month. Spotify's family plan also rose $1 to $16.99.

Spotify stock ranks sixth out of 19 stocks in IBD's Computer Software-Education and Media industry group, according to IBD Stock Checkup. Further, it has a mediocre IBD Composite Rating of 66 out of 99.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.