Spotify Has Announced Record-Breaking User Growth This Quarter. Shares Are Soaring

Main Highlights

• Spotify's stock surged on Tuesday after the company posted fourth-quarter profits and user numbers that significantly exceeded market expectations.

• The streaming platform is set to gain from increased subscription fees, following its recent announcement of higher premium plan prices starting this month.

Spotify delivered quarterly earnings that surpassed forecasts, prompting a positive reaction from investors.

Shares of Spotify Technology (SPOT) jumped more than 18% in recent trading after the company, which offers music, podcasts, and audiobooks, reported fourth-quarter results that beat analyst predictions. Revenue reached 4.53 billion euros ($5.39 billion), slightly ahead of estimates, while earnings per share came in at 4.43 euros, well above the consensus from Visible Alpha.

Spotify also revealed it had achieved 751 million monthly active users (MAUs) and 290 million premium subscribers, both surpassing projections. The company added 38 million net new MAUs during the quarter, which Co-CEO Alex Norström described as the largest quarterly increase in Spotify's history.

Investor Insights

The sharp rise in Spotify's stock price on Tuesday may reflect renewed optimism among investors, despite recent declines due to concerns over valuation and the potential impact of artificial intelligence on the business.

Looking ahead, Spotify anticipates first-quarter revenue of 4.5 billion euros, with 759 million MAUs and 293 million premium subscribers. Analysts had predicted revenue of 4.57 billion euros, 752.6 million MAUs, and 293 million premium subscribers for the same period.

The company is broadly expected to benefit from its decision to raise subscription prices, following last month's announcement that premium plan costs would increase starting this month.

Despite the recent rally, Spotify's shares remain down about 15% year-to-date and are still nearly 40% below their peak from last June.