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Spotify Technology S.A. (SPOT) Stock in Decline on Weak Guidance for Q1 2022

Spotify Technology S.A. (SPOT), a company that provides audio streaming services worldwide, has plummeted 10.43% in aftermarket trading session and as a result, is trading at $171.90 at the time of the writing. During Wednesday’s regular trading session, the stock declined by 5.75% and closed the day at $191.92. The plunge in aftermarket could be attributed to weak financial guidance as the company announced results for the fourth quarter of fiscal 2021.

SPOT Q4 2021 Results

In the late hours of Wednesday, SPOT released the results for the fourth quarter of the fiscal year 2021. The quarter ended on 31st December 2021. The company generated revenue of 2.6 billion euros during the quarter against 2.1 billion euros for the fourth quarter of fiscal 2020. The total operating expense for the three months remained at 719 million euros against 644 million euros for the same three-month period of 2020. The net loss attributable to the shareholders of Spotify was 39 million euros (or the basic and diluted loss per share of 0.20 euros and 0.21 euros respectively) against the net loss of 125 million euros (or basic and diluted loss per share of 0.66 euros) for the same period of 2020.

Outlook for Q1 2022

SPOT also released the outlook for the first quarter of 2022. The company expected the total monthly active users to stand at 418 million during Q1 2022, while the number of total premium subscribers is expected to hover around 183 million. The company expects to generate total revenue of 2.6 billion euros during Q1 2022. The gross margin for the three months is expected to remain at 25%, while the company expects to have an operating loss of 67 million euros during the quarter.

Product and Platform Update

SPOT is also provided with product and platform updates. The company said that its two-sided market exceeded the contribution expectations for the fourth quarter as well as for the full year 2021. The company had 3.6 million podcasts on its platform at the end of the fourth quarter of 2021. The company introduced various product enhancements during the quarter which were meant to drive user engagement. Through its agreement for the acquisition of Findaway, it accelerated entry into audiobook space.

Future Outlook for SPOT

Stats reveal that during the last three months, SPOT stock has declined by approximately 35%. The recent ones, however, suggest that the stock is on a positive trajectory. Looking ahead, analysts believe that the stock holds several negative signals and hence, is expected to perform weakly in the next couple of weeks.

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