NEW YORK (AFP) – Shares of Spotify tumbled on Wednesday after the music streaming service – roiled in controversy over its star podcaster Joe Rogan – projected lower profit margins in the coming earnings period as subscriber growth slows.
The company reported solid increases in the fourth quarter in terms of monthly active users and 180 million premium subscribers, in line with earlier forecasts.
But the streaming service forecast its first quarter 2022 gross profit margin would fall to 25 per cent from 26.5 per cent. And it projected adding just three million premium subscribers in that period, a marked slowdown from recent quarters.
Over the last week, Spotify has been hit with the defection of several music superstars including Neil Young and Joni Mitchell over its handling of Rogan’s controversial statements on Covid-19 vaccines.
Executives, nevertheless, touted the platform’s long-term growth potential and broadly defended their handling of the Rogan controversy, adding that it was too soon to know how it would affect the company’s financial performance.
Spotify’s shares fell 10.9 per cent to USD171.00 in after-hours trading. The stock has fallen sharply steeply over the last year, along with other “stay-at-home” stocks that benefitted from the disruptions to daily life caused by the Covid-19 pandemic. The company reported a quarterly loss of EUR39 million as revenues increased 24 per cent to EUR2.7 billion.
Spotify pointed to “continued momentum in our subscription business and meaningful advertising results”, adding that “we see a tremendous amount of greenfield on the horizon”.
Spotify’s press release made no mention of the Rogan controversy, while emphasising that consumption trends on the podcasting platform “remained strong”.