Spotify Technology (NYSE:SPOT) shares lost more as much as 11% during the trading session on Thursday after the music streaming service company posted a weak earnings guidance for its next earnings report.
Earnings Report
The company which launched the initial public offering of its shares last month posted earnings results for the first quarter that exceeded most analyst estimates failed to impress investors due to its weak guidance and expectations for the second quarter.
During the same quarter last year, Spotify posted a net loss of 173 million. For this quarter, Spotify had a net loss of 169 million euros slightly narrower than the same period a year ago.
Spotify delivered a revenue of $1.37 billion or 1.14 billion euros in line with most analyst estimates while the number of its paying subscribers came in at 75 million slightly in line with analyst forecasts of 75.1 million. The company’s advertisement supported users on a monthly basis came in at 99 million slightly higher than analyst expectations of 98 million.
Despite the mostly upbeat earnings numbers, Spotify gave a weak earnings guidance that pushed the shares of the company lower from Wednesday’s after-hours trading until Thursday. For the current quarter, Spotify is expecting a revenue of around 1.1 billion euros to as much as 1.3 billion euros. This is below analyst estimates of 1.29 billion euros or $1.55 billion.
Spotify also gave a weak forecast for its subscriber growth. For the second quarter, Spotify is expecting around 79 to 83 million compared to analyst estimates of 82.1 million.
Despite this, Spotify is still expecting to lose as much as $397 million or 330 million euros this year which was also the company’s initial forecast.
Spotify Shares
Shares of the company are now down to its lowest price for the first time since Spotify went public last month. The stock which closed 6% lower during the trading session ended at $160.83 per share. Spotify shares have slumped as early as the extended trading session on Wednesday when its first earnings report as a public company was released.
Spotify shares which are up by 14% since its IPO on April 3 has been given a price target of $190 by some analysts who saw no change on its outlook on the earnings and stock growth of the company. While the earnings guidance for the upcoming quarter disappointed most analysts, some have commented that the company’s strong first-quarter earnings were expected more rather than its expectations and targets for the next quarterly earnings report.