Spotify’s stock price fell up to 9% on Wednesday (February 3) after the company’s earnings release for the fourth quarter of 2020. At the end of the day, Spotify was trading at $ 317.56, down 7.97% from Tuesday’s closing price, and lost $ 5.27 billion of market capitalization.
Investors did not lower the price because of Spotify’s financial performance in 2020. In fact, Spotify coped well with the pandemic and probably benefited from the broader shift from consumers to streaming media, mainly video-on-demand services like Netflix and Disney +. Revenue reached $ 9.48 billion and subscriptions increased by an impressive 11 million – the maximum in four quarters – to 155 million, reaching fourth quarter revenue and subscriber growth forecasts. That average revenue per user fell $ 0.19 from the previous year, it matters less when Spotify is opening up in new markets and adding subscriptions – many of them family plans – at a good pace.
Instead, Spotify’s stock price fell because its projection for revenue and subscribers in 2021 was lower than analysts had expected. After closing 2020 with 345 million monthly active users, Spotify predicts the number will grow to between 407 million and 427 million by the end of 2021, with $ 10.8 billion to $ 11.3 billion in revenue – a increase of 14% to 19% from 2020.