Swedish meatball
Spotify shares sink on lower forecast
Spotify’s stock plunged as much as 10 percent after the Swedish music streamer cut its forecast for subscriber growth and played down speculation it’s looking to compete directly against big record labels.
“We don’t view this as Spotify has to win and the labels have to lose,” Spotify Chief Executive Daniel Ek said during a Thursday call on the company’s third-quarter earnings.
Speculation has been building that the world’s largest music-subscription service, with 87 million paying customers, would use its distribution clout to bypass the labels and sign up artists itself.
Spotify said during the call that it has drawn 250,000 participants to its month-old Spotify for Artists program, which it described as “an easy way for creators to get their content onto our platform, reach new and existing fans and, most importantly, get compensated for their work.”
Nevertheless, Ek denied that Spotify had any plans for “doing a Netflix” and bank- rolling big-name recording artists in the way that Netflix has funded original TV series like “House of Cards” to bypass Hollywood.
“Netflix on the surface is a very similar business to ours,” Ek said. “But under- neath that surface, it’s very different in the case of our marketplace strategy and their original content strategy.”
Spotify said its earnings per share came in at 26 cents, compared with a loss of $2.96 in the year-earlier quarter, while revenue rose 31 percent, to $1.53 billion.
Wall Street had been expecting an EPS loss of 27 cents and revenue of $1.51 billion.
Spotify also came close to making its first-ever operating profit in the third quarter, but the company said that was because it had not been spending heavily enough to hire more engineers.
For the quarter ending in December, Spotify shaved the upper end of its subscriber forecast by 1 million, resulting in a revised range of 93 million to 96 million.
Spotify shares closed at $141.16, off 5.7 percent.