Spotify’s shares saw a significant boost in extended trading on Tuesday, rising approximately 8% following the company’s better-than-expected guidance for the fourth quarter, despite reporting mixed results for the third quarter. The Swedish music streaming giant posted a revenue of 3.99 billion euros and earnings per share of 1.45 euros for Q3, both slightly below analyst expectations. Analysts had anticipated 4.02 billion euros in revenue and earnings of 1.72 euros per share. However, Spotify’s forecast for the current quarter exceeded predictions, which reassured investors.
The company projected a fourth-quarter operating income of 481 million euros, surpassing the average analyst estimate of 432.7 million euros, as reported by StreetAccount. Spotify also raised its forecast for monthly active users (MAUs), anticipating an increase to 665 million in Q4, compared to the analyst forecast of 659.3 million. These figures spurred investor confidence, despite the company’s revenue guidance falling slightly short of expectations. Spotify expects Q4 sales to reach 4.1 billion euros, below the consensus estimate of 4.26 billion euros.
In terms of its subscriber base, Spotify Premium, the company’s ad-free subscription service, grew by 12% year-over-year to 252 million subscribers, edging past analyst predictions. This growth in paying users further buoyed investor optimism, contributing to the upward momentum in the company’s stock price.
Despite the revenue shortfall for the third quarter, Spotify’s strong subscriber growth and positive fourth-quarter outlook have been key factors in the company’s robust stock performance. As of now, Spotify’s shares have more than doubled in value this year, reflecting investor optimism about the company’s future prospects.
The surge in Spotify’s stock price, rising to $452.35 after a 2.2% increase in regular trading, reflects investor confidence in the company’s ability to meet its growth targets in the coming months. As Spotify continues to expand its user base and refine its subscription offerings, it remains a key player in the highly competitive music streaming industry.
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