Wall Street expects Spotify to post substantial losses next week

Photo credit: Maxim Hopman

Wall Street analysts expect Spotify to post a year-over-year decline, despite higher revenue this quarter.

Spotify’s earnings report is expected to be released on October 25, 2022. Zacks analysts to believe the DSP will post a quarterly loss of $0.88 per share in the next earnings report, a year-over-year change of -83.3%. Revenue is expected to reach $3.06 billion, up 3.8% from the same quarter a year ago.

Spotify CEO Daniel Ek says the ‘disastrous macroeconomic environment’ won’t dampen his company’s momentum on the Call for Q2 results. That report generated total revenue of $2.9 billion, up 23% and just ahead of analyst consensus expectations. Spotify has 433 million monthly active users, up 5 million from its projection and more than 19% from a year ago.

For its third quarter 2022 report, Spotify said it expects to add 6 million premium subscribers and 17 million new users. Spotify’s stock lost more than half its value in 2022 as the sector’s tech stocks took a beating. Investors want to see a company that has more than one trick up its sleeve, like Netflix.

Spotify’s use case is that it’s home to more than music streaming, it also offers podcasts and now audiobooks. Music streaming is no differentiator when its major competitors (youtube music, Apple Music, Amazon Music) are owned by companies with ecosystems and services that people already subscribe to. Apple and Google both offer music streaming as part of their bundled services. Even Amazon provides access to a clean music library for Prime subscribers.

Spotify’s strength lies in developing its social features and exclusive content – community playlists, curated content and podcast offerings are all part of this strategy. “I think a lot of people lump us together with Netflix,” said Ek. “And I’ve said it before, but I’ll say it again – in addition to being both media companies and being primarily subscription revenue companies, that’s kind of where the similarities are. ‘stop for me.’

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