Spotify Technology (NYSE:SPOT) is a pioneer in the streaming audio space. Its platform provides on-demand access to music and podcasts, and with over 380 million monthly active users, Spotify is the industry leader.
In this Backstage Pass video, which was recorded on Oct. 27, Motley Fool contributor Jose Najarro discusses Spotify’s third-quarter earnings report, highlighting the metrics that sent the stock soaring.
Jose Najarro: For those not familiar with Spotify, it is the music subscription service. They are a European-based company, so they do report in euros. Quarter three was about €2.5 billion. This beat expectations — it was actually up 27% year over year. Their premium subscribers, and this is where they make most of their money, premium subscribers were 172 million and that was up 19% year over year and that also beat expectations. I believe analysts were expecting somewhere around 171.5 million in premium subscribers. This was an important point — I believe this is why the stock price went up a nice amount.
A lot of people probably thought Spotify was a nice COVID play, where only people working from home are listening to their services, so they weren’t expecting much growth. But we can see with the premium subscriber beat, this is one that it’s not only a COVID play. I’m guessing a lot of people now going back to work with the overall commuting, they’re probably listening to their podcast or music. One thing is, though, Spotify has definitely taken quite a hit from its 52-week high. I believe it’s down over 25% from its 52-week high.