What just happened? Spotify in its latest earnings report realized impressive user growth for the fourth quarter of 2020 but continued uncertainty regarding the pandemic has caused investors to be weary about the company's soft outlook for Q1. As a result, share value in Spotify stock is down in early morning trading.
Spotify on Wednesday reported subscriber growth for the fourth quarter of 2020 that beat Wall Street expectations.
For the three-month period ending December 31,2020, Spotify added 25 million new monthly active users, pushing its total to 345 million - up eight percent consecutively and 27 percent year-over-year. As for premium (paying) subscribers, Spotify added 11 million in the quarter to finish at 155 million. That's good for an increase of 24 percent compared to the same period a year earlier.
Spotify cited an "acceleration of users who engage with podcast content" during the quarter as one reason for its strong performance.
If you recall, Spotify inked a deal with Joe Rogan in mid-2020 to bring his podcast, The Joe Rogan Experience, to the streaming platform as part of a deal rumored to be valued at more than $100 million. In December, the show became a Spotify exclusive and by the end of the year, it was the number one podcast on Spotify across 17 markets.
Looking ahead, Spotify said it is facing "increased forecasting uncertainty" compared to previous years due to the pandemic and its ongoing effect on user, subscriber and revenue growth. That said, the company expects Q1 total monthly active users to be between 354 million and 364 million. Total premium subscribers, meanwhile, are forecasted to reach between 155 million and 158 million.
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