Spotify stock fell 16% in 2 days, 67% for year as investors lose patience
UPDATE 2: Spotify stock fell another 3.17% on Thursday, closing at $81.74 after tumbling 13.01% on Wednesday. NYSE: SPOT began 2022 in the $240 per share range and has declined more than 66% this year.
Spotify’s downward trend continued in pre-market trading Friday.
Shares in META (Facebook, Instagram) fell 28% so far this week after it reported a decline in revenue. All this on a week when the overall markets trended upward.
This week’s drop came after a mixed Q3 report on Tuesday, and Spotify CEO Daniel Ek’s decision not to immediately follow Apple Music’s lead in raising subscription prices by 10%.
Spotify also continues to invest aggressively, particularly in audiobooks and podcasts, at a time when other tech companies are slowing spending due to current unfavorable macroeconomic conditions.
“Many investors question whether Spotify will ever be able to generate significant lasting profitability (especially given the concentrated power of the music labels & competition not necessarily focused on generating profitability),” Pivotal Research Analyst Jeffrey Wlodarczak wrote in a new note to clients. “The results/outlook do not provide evidence to the contrary.”
Bloomberg analyzed Spotify’s Q3 report compared to a consensus of analysts:
- Revenue: $3.01 billion versus 2.99 billion expected by analysts
- Adjusted loss per share: -$0.99 versus -$0.82 expected by analysts
- Total monthly active users: 456 million versus 450 million expected
“Despite a narrow beat on both revenue and total monthly active users, investors remained hyper-focused on the platform’s wider-than-expected loss, along with its declining gross margins, which came in at 24.7% — missing expectations of 25.2%,” reported Bloomberg’s Alexandra Canal.
Bruce Houghton is Founder and Editor of Hypebot and MusicThinkTank and a Senior Advisor to Bandsintown which acquired both publications in 2019. He is also President of the Skyline Artists Agency and a professor for the Berklee College Of Music.