Spotify Stock Hits a Five-month High on Rising Profits and Subscriber Numbers

Spotify Stock

Spotify Stock (NYSE:SPOT)

After reporting earnings for the fourth quarter that narrowly missed financial targets but surpassed all-important expectations for daily users and gross margin, Spotify (NYSE:SPOT) has surged 13% hitting a 5-month high. This rise comes after the company posted earnings for the quarter that narrowly missed financial targets.

On Tuesday, Spotify stock increased by as much as 13.3%, marking its largest one-day rise since exactly one year ago (Spotify stock increased by 13.5% on January 31, 2022).

The loss per share was far worse than anticipated, and the operating loss increased to €231 million from a loss of €7 million the previous year. Revenues increased by 18%, coming in at nearly 3.17 billion euros, while premium revenue also increased by 18%, reaching 2.72 billion euros.

However, the overall number of premium members reached 205 million, around 3 million more than experts anticipated. The number of monthly active users increased to 489 million, although the average estimate was 478.5 million.

As a result, analysts’ attention was directed less toward the company’s stated earnings and more toward its margins, which have long been an area of emphasis at the business. A decrease in investment cost and “broad-based music favorability” contributed to a gross margin of 80 basis points higher than had been projected.

According to Wells Fargo, the margin and subscriber figures delivered “the green shoots bulls crave.” However, the company remained focused on the margin: Due to the severance that took place this year, the prognosis is dim, and the year 2023 will be crucial for the advancement of the margin.

Citi has a Buy rating and a price target of $140 on Spotify stock, pointing to the gross margin beat as well as an “incrementally positive” first-quarter outlook: Spotify (NYSE:SPOT) has guided above consensus for revenues of €3.1 Billion, monthly active users of 500 Million, and premium subscriptions of 207 Million. 

Featured Image: Unsplash @ Sara Kurfeß

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