Spotify stock plunges after underwhelming subscriber forecast

3 Feb 2022

Image: © sdx15/Stock.adobe.com

As Spotify continues to deal with the Joe Rogan fallout, the streaming platform is forecasting a slow start to the year.

Spotify’s stock took a hit after it predicted a slowdown in subscriber growth in the first quarter of this year.

The streaming company forecasted that it will reach 183m paid subscribers in the current quarter, just short of analyst expectations of 184m, Reuters reported. Following the announcement, Spotify’s stock price went down by as much as 18pc on Wednesday (2 January).

Future Human

The company made the prediction in its fourth-quarter report for 2021, which showed steady growth in revenue, monthly users and paid subscribers.

Spotify revenue reached $2.68bn in the quarter, representing year-on-year growth of 24pc. Monthly active users increased by 18pc to 406m, while premium subscribers were up 16pc to 180m. Ad-supported revenue grew significantly over the last year, reaching 15pc of Spotify’s total revenue for the fourth quarter.

Speaking on the earnings call, Spotify CEO Daniel Ek addressed the recent controversy the company has been facing surrounding Joe Rogan’s podcast.

The streaming platform has been under fire in recent weeks for hosting The Joe Rogan Experience, which has featured interviews criticised for spreading false information about Covid-19 and vaccines. Last week, musicians Neil Young and Joni Mitchell requested to have their music removed from Spotify after raising concerns about the spread of misinformation.

In response, the company published new platform rules and said a content advisory would be added to shows discussing Covid-19.

Ek said on the call that “there’s still work to be done” but the advisories have begun to roll out.

“I think the important part here is that we don’t change our policies based on one creator nor do we change it based on any media cycle or call from anyone else,” he added.

“And while Joe has a massive audience, he’s actually the number-one podcast in more than 90 markets, he also has to abide by those policies.”

Spotify has invested around $1bn into the podcasting business, according to Reuters. The Joe Rogan Experience is one of its most popular podcasts, and was acquired by the platform in 2020 in a deal worth around $100m.

Spotify said it had 3.6m podcasts on its platform at the end of the fourth quarter, up from 3.2m the previous quarter.

“When we entered into the podcast space in 2019 with the intent to help modernise and grow this space for all type of creators, we assumed it would challenge and test our teams in new ways,” Ek said. “And there’s no doubt that the last several weeks have presented a number of learning opportunities.”

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Leigh Mc Gowran is a journalist with Silicon Republic

editorial@siliconrepublic.com