Home Equities Score Spotify Technology S.A. (SPOT) Stock Prices Trending Down Following Lackluster Financial Reports

Spotify Technology S.A. (SPOT) Stock Prices Trending Down Following Lackluster Financial Reports

Spotify Technology S.A. (SPOT) stock prices were down 1.71% as of market close on April 27th, 2021, bringing the price per share to USD$292.92 at the end of the trading day. Subsequent today in current-market fluctuations saw the stock price further fall by 9.02% to hit USD$266.51.

Growth in Revenue

With total monthly active users having seen a 24% year-over-year increase to sit at 356 million users in the first quarter of 2021, Q1 2021 saw the addition of 11 million monthly active users. With U.S., Mexico, Russia, and India markets having performed as expected, growth in Latin America and Europe fell short of expectations. Numbers reported for the quarter, and, as a result, for cumulative totals were within the guidance range for the quarter but fell short of internal expectations.


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Consumption Rates

Q1 2021 saw significant growth in global consumption hours as compared to the same time period of the previous year. Consumption increased per user across the board with developing regions still lagging behind pre-COVID levels, unlike the increased pandemic consumption in developed regions such as North America and Europe.

Spotify Premium Growth

The company’s Premium service also saw a year-over-year increase of 21% in monthly subscribers of the paid service. Premium subscriptions were reported to be a cumulative 158 million, with nearly 4 million paid subscribers having been added in Q1 2021. The numbers reported leaned towards the top end of guidance ranges, with North American paid subscriptions leading the growth across all regions. Latin America especially outperformed expectations with a general preference for the Family Plan Spotify product.  South Korea was the biggest driver of the company’s contributions from new markets.

Underwhelming Expectations

As a result of subscriber outperformance and effective advertising, total revenues reported were at the top end of the company’s guidance range, coming in at USD$2,592 million to represents a year-over-year growth of 16%. Spotify Premium revenues increased to USD$2331.28 million, a 14% year-over-year increase, while revenue from ads grew a monumental 46% year-over-year to USD$260.77 million.

Q1 2021 Developments

March 29th, 2021 saw SPOT announce its acquisition of Betty Labs, the creators of Locker Room, to facilitate the company’s foray into the live audio space. Q1 2021 also saw several upgrades being launched to improve the user experience for the company’s platforms, including the addition of a Desktop App and a redesigning of the existing Web Player. Given the expanding reach of the company’s products, they also took steps to include 36 new languages on their web platform, bringing the total number of languages it can be accessed in up to 62.

Future Outlook for SPOT

Spotify has become a household name and the company’s footprint continues to grow in existing and emerging markets. With stellar financial reports that largely exceed expectations and a Q1 2021 that saw various developments geared towards future growth, the company is poised to meet and exceed its future guidance targets, thus ushering in sustained and significant increases in shareholder value.

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