Spotify stock plummets after earnings beat expectations as guidance disappoints

Spotify, the Swedish audio streaming giant, saw its stock tumble by 9% in premarket trading following a disappointing earnings outlook that overshadowed its positive financial results. After the earnings report was released, the New York-listed shares plummeted as much as 12% before recovering slightly. In the first quarter, Spotify reported a revenue increase of 8% from the previous year, reaching 4.5 billion euros (approximately $5.3 billion). The company also celebrated a 12% year-on-year rise in monthly active users (MAUs), totaling 761 million, surpassing analyst expectations from FactSet. Additionally, Spotify's premium subscriber base grew by 9% to 293 million, with a net addition of 3 million subscribers during the quarter. Looking ahead, Spotify projects an increase of 17 million net users in the current quarter, bringing the total MAUs to 778 million. The company also anticipates growth in premium subscribers, expecting to add 6 million more for a total of 299 million. However, while the MAU guidance for the second quarter slightly exceeded Wall Street's forecasts, analysts had anticipated a larger increase in premium subscribers, expecting over 300.4 million. Spotify acknowledged in its earnings presentation that the guidance comes with "substantial uncertainty." They forecasted an operating income of 630 million euros, which is below the market expectation of around 680 million euros, according to FactSet. In its quest for improved profitability, Spotify has frequently raised the prices of its premium subscriptions, with the most recent hike occurring in February, when the monthly fee increased from $11.99 to $12.99 in the U.S. As of Monday's market close, Spotify's stock has declined 14% year-to-date.