Shares of Spotify Technology (SPOT) were down about 10% in early trading on Wednesday as the company reported total monthly active users (MAUs) of 356 million, versus the consensus estimate of 360.4 million. Spotify had guided for MAUs of 354 million to 364 million.
The music streaming company posted a net loss per share of €0.25, versus the consensus estimate of a net loss per share of €0.43. Meanwhile, revenue grew 16% year-on-year to €2.15 billion.
This growth in revenue was on the back of a 14% year-on-year gain in premium revenue and 46% year-on-year growth in ad-supported revenue.
Additionally, Spotify saw a 24% year-on-year increase in MAUs and a 21% year-on-year jump in the number of premium subscribers.
Looking ahead to 2Q, Spotify estimates total MAUs of between 366 million and 373 million and total revenue of between €2.16 billion and €2.36 billion. This guidance incorporates a 200 basis points forex impact. (See Spotify stock analysis on TipRanks)
For full-year 2021, Spotify noted it has “modestly” lowered its total MAU range, consistent with the lower-than-expected MAU growth it experienced in 1Q.
For 2021, Spotify now expects total MAUs to be between 402 million and 422 million. Incorporating a 75 basis point forex impact, the company is calling for revenue of €9.11 billion to €9.51 billion.
Today, Merrill Lynch analyst Jessica Reif Cohen reiterated a Buy rating on the stock with a $428 price target (61.5% upside potential).
Meanwhile, yesterday, Rosenblatt Securities analyst Mark Zgutowicz reiterated a Buy rating on Spotify with a $425 price target.
Zgutowicz thinks the recent price hikes in family/student/duo plans by Spotify across major markets is “just the beginning of new revenue lift initiatives over the next 24 months.”
Additionally, Zgutowicz expects the company to implement a podcast exclusives paywall by the end of 2021, with a minimum subscription of $3 per month.
Consensus among analysts is that Spotify is a Moderate Buy, based on 12 Buys, 7 Holds, and 2 Sells. The average analyst price target of $349.61 implies a potential 32% upside. Shares have gained about 108% over the past year.