Spotify stock notched its second-consecutive day of significant declines Tuesday as investors responded sourly to the music streaming service’s price hikes in its premium plan and another quarter of staggering losses.
Tuesday was a bloodbath for Spotify stock.
Key Takeaways
- Spotify shares tumbled more than 12% to $144 by 3 p.m. ET, slipping to their lowest level since late May and building on the stock’s 4.7% loss Monday.
- Driving the losses Monday, the Swedish company announced it would raise the price for its individual Premium plan from $9.99 to $10.99, while a quarterly earnings report Tuesday morning disappointed financial expectations and further doused the stock.
- Spotify lost roughly $330 million during the second quarter, far worse than its $225 million loss during the first quarter and its $138 million loss during the second quarter of last year, while its $3.5 billion of quarterly revenue came in short of consensus analyst estimates tracked by FactSet.
- Yet, the company painted a different picture in its earnings release, as it highlighted its strongest-ever quarterly growth in monthly active users and its best-ever second quarter for paid subscriber growth, primarily attributing its losses to its efforts to “streamline operations and reduce costs.”
- Shares of Spotify are still up about 80% this year, though they are down nearly 60% from their 2021 all-time high of nearly $370.
Big Number
$6 billion. That’s how much market capitalisation Spotify has lost this week. Its $28 billion valuation makes it slightly smaller than HBO and CNN parent Warner Bros. Discovery.
Related
Key Background
The wildly popular Stockholm-based music streaming app shrank its net loss from $686 million in 2020 to $39 million in 2021 but has not been able to keep its early pandemic magic, bleeding $449 million last year and nearly $580 million through the first six months of 2023, according to FactSet data.
Spotify stock’s meteoric rise and precipitous fall came as investors in streaming services refocused their attention on bottom lines rather than subscriber growth. Spotify rivals Apple Music, Amazon Music and YouTube Music each raised prices for their premium services by 10% or more over the last year. The Wall Street Journal first reported Spotify’s planned hike Friday.
Surprising Fact
Spotify stock’s 11% crash Tuesday is on pace to be its largest single-day drop since last October.
This article was first published on forbes.com and all figures are in USD.
