Spotify shares sank by 11% due to pessimistic earnings forecast
Spotify's share price experienced its biggest drop in 6 months as analysts were not impressed with its performance. The paid music service reported an increase in paid accounts to make a total of between 93 and 96 million by the last quarter of this year. However, this still fell below the pre-existing projections for the same quarter.
In addition, the company's actual revenue dropped by about 6% per subscriber. This was attributed to Spotify's new family and student plans, which brings in more users, but not for more fees. Therefore, their shares dropped by 11% this morning. Then again, the company has been reported to have clawed about 6% of this loss back by now.
This news was particularly surprising as Spotify actually posted a profit this quarter. However, it also announced that this would probably be eaten by a new program of spending in order to keep the company ahead of its competitors (e.g. Apple Music) in terms of music-streaming technology and techniques.