It was another frustrating quarter for growth stocks that aren’t growing fast enough for the market’s liking, including Spotify.
The digital music streaming service reported a loss of 1.55 euros per share. Meanwhile, revenues of 3.18 billion missed estimates of 3.21 billion euros. đģ
Monthly active users (MAUs) grew 27% YoY to 551 million, with 36 million net additions coming during the quarter. Paid subscribers also rose 17% YoY to 220 million. To help drive revenue growth, the company is joining competitors in raising prices. Yesterday it announced it would increase Premium subscription prices by as much as $2 (or up to 20% for some plans) as the market landscape continues to evolve. đē
With that said, the price changes will have a minimal impact on third-quarter earnings. As a result, the company expects total revenue of 3.3 billion euros. That was shy of the 3.4 billion anticipated by analysts. In the meantime, the company continues to invest in its ad-supported business, which jumped 12% YoY, driven by a 30% increase in podcast ad revenue.
Overall, investors are still waiting for the company’s operating leverage to kick in and drive profitability. $SPOT shares fell 14% on the day. đ
From a long-term perspective, it’s been a rough ride for shareholders. The stock has been in a 50%+ drawdown longer than it has been within 10% of its all-time highs. Not the type of action typically seen from growth stocks whose businesses are firing on all cylinders… đŦ
Some might suggest that $SNAP falls into a similar category. The social media platform reported another weak quarter, plummeting 18% after hours on the news. đ
Downside moves after earnings tend to happen in growth stocks that are no longer “growthing.” And today’s results seem to confirm that theory. đ¤ˇ