Spotify shares close lower on Wednesday, second-quarter loss bigger than expected, revenue tops estimates

Spotify Technology SAs (SPOT) second-quarter revenue, reported on Wednesday, outstripped Wall Street estimates, supported by subscriber growth in the companys premium business. On the other hand, quarterly loss was larger than expected.

Spotify shares closed lower for the sixth time in the past twelve trading sessions in New York on Wednesday. The stock edged down 0.17% ($0.26) to $154.94, after touching an intraday low at $145.67, or a price level not seen since July 22nd ($143.82).

Shares of Spotify Technology SA have risen 36.51% so far this year, following a 21.30% drop in 2018.

Total revenue went up 31% year-on-year to EUR 1.67 billion during the quarter ended on June 30th, while exceeding the median analyst estimate of EUR 1.64 billion.

Revenue from Spotifys premium business surged 31% year-on-year to EUR 1.502 billion during the second quarter, as its premium subscribers grew 31% from a year ago to reach 108 million internationally. Analysts on average had expected 108.5 million premium subscribers.

At the same time, revenue from its ad-supported business rose 34% year-on-year to EUR 165 million.

The music streaming company reported a 29% annual growth in its monthly active users to a total of 232 million during the quarter. In comparison, Spotify had earlier forecast monthly active users within the range of 222 million to 228 million.

The companys total operating expenses went up 4% year-on-year to EUR 437 million during the past quarter.

Spotifys net cash flow from operating activities was reported at EUR 90 million during the second quarter, while its free cash flow was reported at EUR 50 million.

Meanwhile, net loss attributable to shareholders shrank to EUR 76 million (EUR 0.42 per share) during the quarter ended on June 30th from EUR 394 million (EUR 2.20 per share) in the same period a year ago. The median forecast by analysts had pointed to a loss of EUR 0.32 per share.

Spotify also said it expected total premium subscribers to fall within the range of 110 million to 114 million during the third quarter. The company now projects total revenue of between EUR 1.57 billion to EUR 1.77 billion in Q3.

Analyst stock price forecast and recommendation

According to CNN Money, the 25 analysts, offering 12-month forecasts regarding Spotify Technology SA’s stock price, have a median target of $154.67, with a high estimate of $206.62 and a low estimate of $89.27. The median estimate represents a 0.18% downside compared to the closing price of $154.94 on July 31st.

The same media also reported that at least 16 out of 27 surveyed investment analysts had rated Spotify Technology SA’s stock as “Buy”, while 6 – as “Hold”. On the other hand, 4 analysts had recommended selling the stock.