Fri, May 04, 2018 - Page 10 News List

Spotify’s first report as public company flops on Wall Street


A Spotify banner adorns the facade of the New York Stock Exchange on April 3.

Photo: AP

Spotify Technology SA’s first quarterly report as a public held company struck the wrong note with investors, even though its music-streaming service hit the subscriber-growth target set by management just before its stock began trading.

Total subscribers increased to 75 million through last month, up by 4 million from the end of last year. The gains announced on Wednesday enabled Spotify to maintain a large lead over Apple Inc’s music-streaming service, which has about 40 million.

Spotify had projected it would end its first quarter with 73 million to 76 million subscribers in a disclosure made a week before its stock debuted on the New York Stock Exchange early last month.

The stock hit a new high of US$171.23 on Wednesday before backtracking slightly and then tumbled by more than 11 percent in extended trading after the results were released.

Before the retreat, Spotify was valued at US$30 billion, even though the Swedish company has never turned a profit.

Besides perhaps hoping for more robust growth to start the year, investors may have been disappointed with management’s outlook for the current quarter ending in June.

Spotify predicted it would end the period with 79 million to 83 million subscribers.

Spotify CEO Daniel Ek downplayed the threat posed by Apple, Google or Inc in a Wednesday conference call with analysts.

“We don’t see any meaningful impact of competition,” he said.

However, the competition could make it more difficult for Spotify to make money, which has proved to be a challenge since the music service was launched a decade ago.

The main problem has been covering the royalties owed to artists, songwriters and labels that license their music to Spotify’s service.

Spotify could raise its subscription prices (now US$10 per month in the US), but that could drive customers to other music services run by its larger rivals.

Ek said he does not anticipate raising prices the near future.

Besides selling subscriptions, Spotify brings in money from ads played on a free version of the service that accounts for the biggest part of its total audience. All told, Spotify had 170 million users through March.

The firm lost 169 million euros, or 1.01 euros per share, in the first quarter, narrowing from a loss of 173 million euros at the same time last year.

Revenue in the latest quarter increased 26 percent to US$1.1 billion euros.

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