Spotify reaches 400 million users, but forecasts scare investors

Spotify closed the fourth quarter of 2021 with positive but disappointing financial results for the market. Although the number of active users exceeded the 400 million mark, the company’s revenue grew only 7% compared to the third quarter of last year, reaching $2.83 billion. It is worth remembering that the amount was recorded before the controversy involving podcaster Joe Rogan, accused of sharing misinformation about COVID-19.

Compared to the last three months of 2020, Spotify’s revenue rose 27%. However, investors and shareholders of the company were not satisfied with the projections for the first quarter of 2022. As a result, the company’s shares fell 9%, shortly after the announcement of the fiscal balance sheet on Wednesday.

While timid, Spotify’s revenue growth was driven by a rise not only in the numbers of active monthly users and premium subscribers, but also in the money generated by ads between songs —which rose 40%.

Of the $2.83 billion the company recorded, $2.59 billion came from premium subscriptions — 22 percent more than the previous year — and $445.3 million from the advertisements and ads served on the service.

According to the streaming platform, the number of premium users in the fourth quarter of 2021 increased 16%, compared to the same period in 2020, reaching 180 million subscribers. Compared to the third quarter of last year, however, growth was only 4.4%.

Meanwhile, Spotify recorded an 18% increase in the number of monthly active users compared to the last quarter of 2020, reaching 406 million. In relation to the third quarter of 2021, only 7% more people used the platform monthly.

Even with positive results, though small, Spotify’s shares are suffering sharp declines on the New York Stock Exchange. The reason is the disappointing projection for the first half of 2022. According to the company, the goal is to move from 406 million to 418 million active monthly users, and from 180 million to 183 million premium subscribers in three months.

According to SeekingAlpha, investors expected the streaming platform to search for at least 422 million active monthly users and 185.3 million premium subscribers by the beginning of this year. However, the recent exodus of artists and subscribers caused by joe rogan’s controversy has negatively affected the company’s plans.

The problem began when Rogan published an episode of his podcast —which has about 11 million listeners—with scientist Robert Malone. In the program, the presenter and the guest disclosed inaccurate information about COVID-19. Spotify, in turn, didn’t even bother to remove content from the platform.

After this event, several artists and users began boycotting the platform, removing their songs and canceling their premium subscriptions, respectively. Although Spotify CEO Daniel Ek has promised to oversee podcasts from now on, the platform is still badly viewed in the market —and should stay that way for a while longer.