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Spotify stock (SPOT) shares fell by roughly 8% after the company reported its Q1 2025 MAU and subscriber gains, showing the Q2 slowdown in action. So what’s going on?
Spotify reported disappointing user and financial guidance for Q2 after showing the second-highest Q1 subscriber net addition in the streaming giant’s history. The company’s stock (SPOT) fell as much as 8% in early pre-market trading on Tuesday (April 29), and down roughly 6% around an hour before the market opened.
The company’s second quarter monthly active users (MAU) are estimated at about 689 million, down from the roughly 694 million expected by analysts. Similarly, Q2 guidance for operating income and gross margins fell short of expectations.
In Q1, MAUs rose by 10% year-over-year to 678 million, slightly below the estimate of 679 million. Premium subscribers rose by 12% from the year prior to 268 million, leading to the second-highest subscriber net addition Spotify has seen.
“The underlying data at the moment is very healthy: engagement remains high, retention is strong, and thanks to our freemium model, people have the flexibility to stay with us even when things feel more uncertain,” said Spotify CEO Daniel Ek in the company’s earnings release. “The short term may bring some noise, but we remain confident in the long-term story, and the direction we’re heading in feels clearer than ever.”
SPOT closed at around $577 on Tuesday, down almost 4%, a slight improvement over its pre-market trading.
Wall Street analysts say the music streaming platform, alongside fellow streaming giant Netflix, serves as a defensive play amid ongoing macroeconomic uncertainty in the tech sector.
“It is our view that SPOT’s subscription model should be more defensive/utility-like amid the current macro uncertainty,” said Bank of America analyst Jessica Reif Ehrlich.
Spotify’s stock surged to all-time highs of around $652 in February and still climbed roughly 106% over the past year. That’s in stark contrast to the record lows the company faced in 2022.
Content shared from www.digitalmusicnews.com.