Spotify Shares Tumble 13% on Q2 Miss, Disappointing Outlook

Spotify shares tumbled 13.1% in morning trading Tuesday after the audio streaming company reported weaker than expected results for the second quarter and offered disappointing guidance.

The company’s US-listed shares fell 21.39, to $142.35, giving up steady gains it had notched since May, with more than four times the typical number of shares traded in a day already changing hands in the first hour of the session, as investors rushed to dump the stock.

Earlier, the Swedish company reported that its revenue for the three months ended June 30 rose 11% to 3.18 million euros ($3.46 billion), from 2.86 billion euros ($3 billion) in the same period last year. The results missed the Zacks Consensus Estimate by 2.28%.

Spotify reported a net loss of 302 million euros ($329 million) or 1.55 euros ($1.69) per share, more than doubling last year’s loss of 126 euros ($132.2 billion) or .65 euros (68 cents) per share. Analysts, on average, were expecting a a loss of 80 cents per share, according to Zacks.

It said it expects to report total revenue of 3.3 billion euros ($3.37 billion) for the current quarter, below the $3.71 billion expected, on average, by Wall Street.

In one bright spot amid the subdued results, Spotify said it reached an all time high of 551 million monthly active users, adding 36 million from the prior quarter and 118 million over last year and topping the company’s forecast by 21 million. The company said all regions performed well in pulling in new audiences.

Paid, or premium, subscribers rose to 220 million, up 5% from the second quarter and 17% from last year and also ahead of the company’s projections by about 3 million.

While revenue overall was disappointing, the company reported a 23% gain quarter-over-quarter in ad-supported revenue to 329 million euros ($358.3 million). While most of the increased reflected increased music streaming, the company said podcast advertising revenue growth gained more than 30% from last year.

The results came a day after the company said it was hiking rates by $1 for its ad-free subscription, bringing its premium individual offering to $10.99 per month. In its report Tuesday the company said the price increases are expected to have minimal impact on ttotal revenue for the third quarter.

Spotify shares tumbled 13.1% in morning trading Tuesday after the audio streaming company reported weaker than expected results for the second quarter and offered disappointing guidance.

The company’s US-listed shares fell 21.39, to $142.35, giving up steady gains it had notched since May, with more than four times the typical number of shares traded in a day already changing hands in the first hour of the session, as investors rushed to dump the stock.

Earlier, the Swedish company reported that its revenue for the three months ended June 30 rose 11% to 3.18 million euros ($3.46 billion), from 2.86 billion euros ($3 billion) in the same period last year. The results missed the Zacks Consensus Estimate by 2.28%.

Spotify reported a net loss of 302 million euros ($329 million) or 1.55 euros ($1.69) per share, more than doubling last year’s loss of 126 euros ($132.2 billion) or .65 euros (68 cents) per share. Analysts, on average, were expecting a a loss of 80 cents per share, according to Zacks.

It said it expects to report total revenue of 3.3 billion euros ($3.37 billion) for the current quarter, below the $3.71 billion expected, on average, by Wall Street.

In one bright spot amid the subdued results, Spotify said it reached an all time high of 551 million monthly active users, adding 36 million from the prior quarter and 118 million over last year and topping the company’s forecast by 21 million. The company said all regions performed well in pulling in new audiences.

Paid, or premium, subscribers rose to 220 million, up 5% from the second quarter and 17% from last year and also ahead of the company’s projections by about 3 million.

While revenue overall was disappointing, the company reported a 23% gain quarter-over-quarter in ad-supported revenue to 329 million euros ($358.3 million). While most of the increased reflected increased music streaming, the company said podcast advertising revenue growth gained more than 30% from last year.

The results came a day after the company said it was hiking rates by $1 for its ad-free subscription, bringing its premium individual offering to $10.99 per month. In its report Tuesday the company said the price increases are expected to have minimal impact on ttotal revenue for the third quarter.