SPOT Stock Down 17% on Underwhelming User Growth Prediction as Spotify Announces Q4 2021 Financial Results

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by Ibukun Ogundare · 3 min read
SPOT Stock Down 17% on Underwhelming User Growth Prediction as Spotify Announces Q4 2021 Financial Results
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Spotify expects to get  406 million monthly active users (MAUs) in 2022 Q1.

Shares of audio streaming and media services provider Spotify (NYSE: SPOT) plummeted 13% in after-hours trading on the 2nd of February on unimpressive user growth projections. On the day of the loss, Spotify reported its financial results for 2021 Q4, with most numbers exceeding expectations. However, the prediction for user growth in this quarter barely matches analyst estimates. In the fourth quarter, Spotify recorded a 21cents loss per share, reducing the expected 43 cents. The streamer also did better in its revenue, generating 2.69 billion euros. This is slightly higher than analysts’ expectation of 2.65 billion euros.

Yesterday, on February 3, the stock lost 16.76% to trade at $159.76. But today in the pre-market, SPOT is in green, currently showing 3% gains.

Spotify Expects Increased MAUs in 2022 Q1, Compared to 2021 Q4

According to the financial results, Spotify expects to get  406 million monthly active users (MAUs) in 2022 Q1. The prediction is just in line with its guidance of 400 million to 407 MAUs. However, the projected MAU for the current quarter increases over the $381 million recorded in 2021 Q3 and the 345 in 2020 Q4.

Spotify also reported that its premium subscribers grew 16% year-on-year to 180 million in the last quarter. The number is also a 5% jump over 2020 Q4. On the other hand, ad-supported MAUs increased 19% year-on-year to 236 million in the fourth quarter. Spotify said in the Q4 financial result:

“We ended 2021 with strong Q4 results, led by outperformance in MAUs, continued momentum in our subscription business, and meaningful advertising results. Looking back on not just this quarter, but the past few years, we are increasingly excited about the investments we have made and see meaningful progress within a number of our initiatives.”

Noting further, Spotify said it sees a “tremendous amount of greenfield on the horizon,” moving on to 2022 and beyond. In the current quarter, the streamer is looking forward to 418 million MAUs. Whereas, StreetAccount revealed that analysts anticipated guidance of 417.8 million. The company expects to report 183 million total premium subscribers during the same quarter.

Spotify to Halt Annual Guidance Issuance

Henceforth, Spotify said in the Q4 announcement that it will not be issuing annual guidance. According to the company, most of its initiatives are multi-year in nature and measured as such. On the other hand, the stream will provide a “single estimate for each metric instead of a range of outcomes.”

The company’s CEO Daniel Ek started the earnings call by addressing the issue with podcaster Joe Rogan. There have been concerns that the celebrity is spreading Covid-19 misinformation on his show. Medical professionals accused the podcaster of consistently spreading conspiracy theories about the coronavirus on his show. Spotify, on the other hand, has exclusive streaming rights to “The Joe Rogan Experience” and has been under fire for hosting the episodes.

In an effort to address the controversy, Spotify has added content advisories to Cod-19 related matters. This came after musicians began to pull down their songs from the streaming platform.

Spotify has consistently plunged over the past year, losing more than 49%.

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