SPOT: Spotify Stock Slumps 8% as Cautious Outlook Drowns Out Solid First-Quarter Beat

Turns out, impressive earnings aren’t always enough — especially when the future sounds a little “noisy.”

🎵 Spotify Shares Slide After Cautious Forecast

• Shares of Spotify SPOT fell as much as 8% in pre-market trading Tuesday after the streaming giant delivered strong first-quarter numbers but issued a timid forecast that had investors tune out.
• Despite posting a healthy 14% growth in profit and better-than-expected subscriber gains, CEO Daniel Ek's warning of "some noise" in the current quarter was enough to spoil the party.

📈 Revenue Growth Hits the Right Notes

• Rewind time: Spotify’s first-quarter results looked solid on the surface. Monthly active users (MAUs) rose 10% to 678 million, matching the company's guidance. Premium subscribers — the real money makers — climbed 12% to 268 million, topping Wall Street expectations.
• Revenue jumped 15% year over year to €4.19 billion, right in line with forecasts. Average revenue per user grew 4% to €4.73, thanks to recent price hikes, and ad revenue, another key focus area, grew 8% on the back of music and podcast engagement.

💸 Profits Up, But Outlook Missed a Beat

• Profit-wise, the Swedish audio titan posted €225 million, or €1.07 per share, up from €197 million, or €0.97 a share, a year earlier. Investors, though, expected earnings per share to hit €2.33. Gross margin hit 31.6%, slightly above guidance, signaling that cost controls and monetization efforts are paying off.
• So why the selloff? The market hates uncertainty — and Spotify gave just enough of it. For the second quarter, the company is forecasting 689 million users — slightly below analyst expectations — and 273 million premium subscribers, just a touch above estimates. Revenue is expected to land at €4.3 billion, with gross margins projected to hold steady around 31.5%.

🎧 Traders Turn Down the Volume

• CEO Daniel Ek tried to calm nerves, saying that "the underlying data at the moment is very healthy," highlighting strong engagement and customer retention. Still, he admitted that the short term "may bring some noise," a phrase traders took as a polite heads-up that turbulence could lie ahead.
• Shares are in the groove this year, jamming to the beats of 30% gains since the start of 2025. Still, the outlook that missed a few notes wasn’t the perfect encore, but then again, it was another profitable quarter after the company’s first full year of profitability.