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Home Technology Spotify stock plunged after underwhelming Q1 2022 subscriber forecast

Spotify stock plunged after underwhelming Q1 2022 subscriber forecast

The forecast overshadowed the company’s 2021 results, which showed steady growth in revenue and podcasts on the platform.

Spotify’s stock took a hit after it reported an underwhelming forecast of current subscribers for its first quarter, lower than Wall Street expectations.

The audio streaming company forecasted 183m paid subscribers for the current quarter, just short of analyst expectations of 184m, Reuters reported. Following the announcement, the stock price went down by as much as 18pc on Wednesday 2 January.

Spotify made the prediction at its end of year report for 2021, which showed steady results in revenue, monthly users and paid subscriber growth.

The company’s revenue reached $ 2.68bn in its fourth fiscal quarter, representing year-on-year growth of 24pc. Monthly active users increased by 18pc to 406m, while premium subscribers reached 180m.

Ad supported revenue grew significantly over the last year, reaching 15pc of Spotify’s total revenue for the fourth quarter.

Speaking at the earnings call with investors, Spotify CEO Daniel Ek addressed the recent controversy the platform has been facing surrounding misinformation on Joe Rogan’s podcast.

The streaming platform has been under fire in recent weeks for hosting The Joe Rogan Experience, a podcast that has featured interviews criticized for spreading false information on Covid-19 and vaccines. Last week, musicians Neil Young and Joni Mitchell requested to have their music removed from Spotify after raising concerns about the spread of misinformation.

In response, the company created new platform rules and a content advisory to be added to shows discussing Covid-19.

“It’s worth noting that both the content advisories, the COVID-19 content on our platform with content from physicians and health experts… as well as push policies for creators that have already begun to roll out,” Ek said. “So I think the important part here is that we do not change our policies based on one creator nor do we change it based on any media cycle or call from anyone else.

“While Joe has a massive audience, he’s actually the number 1 podcast in more than 90 markets. He also has to abide by those policies. So I think when you think about that and you think about the ads business, I have a tremendous amount of confidence in that, ”he added.

Spotify is said to have invested around $ 1bn into the podcasting business according to Reuters, including the $ 100m deal when it purchased Rogan’s podcast. The company reported 3.6m podcasts on its platform, up from 3.2m the previous quarter.

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