Spotify (SPOT.US) is one of the largest music streaming providers with nearly half a billion active users, including nearly 200 million regular subscribers.
The company, amid controversy over a dispute with the host of Joe Rogan's popular US podcast, is losing nearly 17% today after presenting negative forecasts heralding a slowdown in growth. Fueling the declines was a boycott of the aforementioned podcast by many people, which by opinionated could potentially entail negative sentiment and even an exodus of some customers.
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Open account Try demo Download mobile app Download mobile appThe company reported that it would end the first quarter of 2022 with 418 million users and 183 million paid subscribers. In both cases, the forecasts proved disappointing to Wall Street analysts. Spotify shares fell nearly 23% in pre-market trading, erasing most of the gains made in the post-market rebound. Some losses have now been erased, while the stock price remains deep under the dash.
The company has conveyed that a strong end to 2021 is largely responsible for the poor performance. The company had its record period then, adding 25 million users and nearly 8 million paid subscribers in Q4 2021. Spotify's business grew during the coronavirus pandemic, thanks to new market trends and people's behaviour towards platforms that offer 'free time fillers'.
The uneven return to business after the pandemic has, as usual, made it very difficult for companies to predict exact growth and maintain such a high rate of growth, which they owed primarily to non-standard circumstances. The situation is somewhat reminiscent of Netflix, which also predicted a slowdown in 2022 blaming it on the pandemic which resulted in an avalanche of sales. We can therefore say that we are dealing with a kind of exhaustion of the market, which needs to 'cleanse itself'. From the outset, however, it could have been assumed that such a powerful rate of growth of companies benefiting from the coronavirus pandemic could not be sustained indefinitely and that spectacular increases could be followed by a correction. Of course, the uncertain situation on the broad market adds fuel to the decline.
Spotify (SPOT.US) opens today with a massive downward gap, the lowest since mid-2020. In addition, this is the zone associated with the upper limit of the 2019 consolidation. Source: xStation 5
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