Music Streamer Spotify Posts Surprise Profit As Subscribers Beat Estimates

Music streaming giant Spotify Technology (SPOT) on Tuesday beat expectations for new subscribers and total listeners in the third quarter and posted a surprise profit. Spotify stock jumped on the news.

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The Stockholm-based company added 6 million premium subscribers in the September quarter. Analysts had expected 4.2 million new subscribers. Spotify ended the period with 226 million total paying subscribers worldwide.

Also, Spotify tallied 574 million monthly active users in the third quarter vs. Wall Street’s target of 572 million. Spotify offers an ad-supported service in addition to its commercial-free subscription service. Its monthly active users rose 26% year over year.

The audio entertainment service earned the equivalent of 36 cents a share on sales of $3.65 billion in the third quarter. Spotify reports financial results in euros. Analysts polled by FactSet had predicted Spotify would lose 24 cents a share on sales of $3.52 billion. In the year-earlier period, Spotify lost 99 cents a share on sales of $3.05 billion.

Spotify Stock Jumps After Report

For the current quarter, Spotify expects to add 9 million premium subscribers, vs. Wall Street’s target of 8.3 million. It predicted reaching 601 million total monthly active users in the fourth quarter, compared with the consensus estimate of 597 million.

Spotify forecast revenue of $3.93 billion in the fourth quarter, vs. the analyst target of $3.91 billion.

In addition to music, Spotify offers subscribers podcasts and audiobooks.

In afternoon trades on the stock market today, Spotify stock surged 10.1% to 170.17.

SPOT Stock Gets Price-Target Hike

Raymond James analyst Andrew Marok reiterated his outperform rating on Spotify stock and raised his price target to 180 from 170.

“Spotify’s recent price raise did not hamper growth trajectories, with solid gross adds and no notable churn spike in affected markets,” Marok said in a client note.

Wells Fargo analyst Steven Cahall kept his overweight rating and 250 price target on Spotify stock.

“We expect out-year profit forecasts to come up on this print, while subs appear largely undisrupted by price increases,” he said in a client note.

Truist Securities analyst Matthew Thornton maintained his buy rating and 176 price target on Spotify stock after the report. “Net-net good print,” he said in a client note.

Goldman Sachs analyst Eric Sheridan stuck with his neutral rating on Spotify with a 162 price target.

“Industry data continues to point to Spotify being in a share-taker position and capitalizing on the global growth opportunity,” Sheridan said in a client note.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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