STOCKHOLM (Reuters) – Shares of Spotify Technology SA fell 8% in pre-market trading on Wednesday after its forecast of subdued current quarter paid subscriber numbers overshadowed upbeat first-quarter growth in countries such as the United States and India.
While Spotify has seen a sharp rise in subscribers during the pandemic as people stayed at home due to lockdowns, it faces growing competition from Apple Music, Amazon Music and a handful of smaller rivals.
“Some markets are more advanced in recovering, some are still very much in the sort of pandemic landscape and I think that’s going to play out over the course of the year,” Chief Executive Daniel Ek said in an interview.
Spotify, which launched its services in 86 new countries in the first quarter, said growth in the United States, Mexico, Russia, and India offset lower-than-expected growth in Latin America and Europe.
Ek said he was encouraged by the pent up demand seen in new markets. “This is the sort of next billion user opportunity that we are seeing the early inklings of,” he said.
The company launched several products in the quarter, partnered with Facebook and unveiled a paid podcast subscription platform, a week after Apple.
Spotify has put a lot of effort and money to build the business and now has millions of podcast titles, including “Renegades: Born in the USA” featuring former U.S. President Barack Obama and Bruce Springsteen, and “The Joe Rogan Experience”.
The company expects total premium subscribers in the range of 162 million to 166 million for the second quarter, with consensus forecasts pitched at 166.1 million, according to IBES data from Refinitiv.
The quarterly subscriber guidance seems achievable, especially as the pandemic continues to drive demand for audio content, said Alexandre Jornod, an analyst at Futuresource Consulting.
It forecast total revenue in a 2.16 billion euro to 2.36 billion euro range with analysts consensus estimate at 2.27 billion euros.
First quarter premium subscribers were up 21% to 158 million from a year earlier. Analysts on average were expecting the company to have 157.5 million paid subscribers, according to IBES data from Refinitiv.
Revenue rose to 2.15 billion euros for the three months ended March 31, beating expectations.
(Reporting by Supantha Mukherjee in Stockholm; editing by Emelia Sithole-Matarise and Elaine Hardcastle)