“Spotify Technology posted stronger-than-expected subscription growth in the fourth quarter of 2020 as more listeners tuned in to music and podcasts from home amid the coronavirus pandemic,” WSJ writes.
Numbers To Consider:
- Spotify had 345 million monthly active users at the end of Q4, an improvement of 27% from the year prior.
- Paying subscribers rose to 155 million, a 24% jump from the year before.
- Overall revenue grew 17% to €2.17 billion.
- Spotify now has 2.2 million podcasts available on its platform.
Why It Matters: The pandemic has clearly generated a positive impact for Spotify, not to mention adding “The Joe Rogan Experience,” the No. 1 show in 17 markets to its platform. Still, the company “offered a conservative outlook for the current year as new sign-ups could ebb.”
What’s Next: Spotify expects to add around 20 million monthly active users and roughly 12 million paying ones, while forecasting revenue growth to more than €9 billion.
- “If Spotify reaches the high end of its expectations this year, the guidance represents year-over-year subscription growth of 19%, a slower rate than last year’s 25% increase.”
The stock is down 8% this morning on the muted guidance and the market clearly was expecting higher growth.
We exited our position on the ROIC Big Board on Monday and alerted ROIC members, which in retrospect was good timing (at least in the short-term). I still love this company long-term, though, and will consider getting back into the stock once it’s trading for 15-16x forward Gross Profit again.