Spotify Tumbles 11% as Growth Misses Expectations Despite User Surge
Spotify’s stock took a sharp 11% dive on Tuesday — marking its worst trading day since July 2023 — after the music-streaming giant missed analysts’ revenue forecasts and offered weaker-than-expected guidance for the upcoming quarter.
The company posted a Q2 loss of €86 million, or €0.42 per share, falling short of market expectations which anticipated a profit. Revenue came in at €4.19 billion, slightly below projections of €4.26 billion, though it was up 10% from €3.81 billion a year ago.
Spotify attributed the setback to rising expenses in personnel, marketing, and professional services, along with €115 million in social charges. The company’s outlook for Q3 also disappointed, forecasting €4.2 billion in revenue — trailing the €4.47 billion target suggested by analysts. It cited a nearly 500-basis-point hit from unfavorable foreign exchange rates.
Despite the financial stumble, user growth remains strong. Monthly active users rose 11% year-over-year to 696 million, and premium subscribers jumped 12% to 276 million. The platform projects 710 million total users and 281 million paying subscribers by the end of Q3.
Advertising revenue declined 1% to €453 million, although leadership expressed optimism in the ad tech segment, especially in areas like business tools and automation. Spotify also launched new features, including expanded access to its AI DJ and audiobook listening in more countries.
CEO Daniel Ek acknowledged the disappointing results but remained optimistic, stating the issues were more about execution than strategy. He pointed to early traction in Spotify’s programmatic advertising and ongoing product expansion as signs of forward momentum.
The company recently increased its share buyback program by $1 billion and now employs over 7,300 full-time staff. Even with the recent dip, Spotify shares have surged more than 40% year-to-date.
