Spotify shares fall after it trims 2021 user forecast

Spotify Technology (SPOT) shares fell Wednesday after the audio streaming company reported first-quarter earnings and cut its 2021 estimate for monthly active users to a range of 402 million to 422 million from 407 million to 427 million.

Luxembourg-based Spotify, one of the first to thrive in its industry, has increased users during the pandemic lockdown, but still faces intense competition. The company has invested a significant amount in its podcast platform, while Apple (AAPL) recently announced it was launching its own paid podcast subscription service.

Spotify shares recently traded at $266.27 (U.S.), down 9.2 per cent. They have gained only 2 per cent over the past six months, compared to 23 per cent for the S&P 500.

In the first quarter, the company registered a loss of 0.25 euro per share, widening from 0.2 euro a year earlier. Operating income totalled 14 million euros, swinging from a loss of 17 million euros. The Bloomberg analyst survey called for an operating loss of 18 million euros to 60 million euros in the latest quarter.

Revenue hit 2.15 billion euros, up 16 per cent from 1.85 billion euros last year. The latest figure matched the analyst consensus.

Regarding its latest user number projections, Spotify did say that “given the extraordinary operating circumstances we currently face with respect to the impact of COVID-19, there is a greater likelihood of variances with respect to those [forecast] ranges than typical quarters.”

Last week, Jefferies analyst Andrew Uerkwitz began coverage of Spotify with a buy rating and $360 price target.

The company will probably turn into “the primary audio platform for creators,” he wrote in a report cited by Bloomberg. Spotify has “substantial” long-term opportunity and trades at a discount to other content platform companies, he said.
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