Spotify stocks saw a plunge of around 18% in late trading a few days ago. A slowdown expectation in subscriber outlook isn’t helping the cause.
Wall Street expectations turned out to be higher this Wednesday, as Spotify stock plummeted in double figures. Executives rushed to the scene to reassure investors but it is still ambiguous whether the recent Joe Rogan Experience podcast controversy had any part to play, or was there something else the market was experiencing.
“While we have not given full year guidance anymore on subscribers … we don’t expect a material difference in the net additions for either users or subscribers in 2022 relative to 2021,” CFO – Paul Vogel told Reuters.
Stock Plummeting In After-Hours Trading
The streaming music company’s stock dove around 18% as a result of after-hours trading.
Many analysts say that slow subscriber growth in the first quarter is to blame, while the company is expecting three million premium subscriber growth. This would make the growth figure 1.7% for the company.
But the looming fact remains whether the Joe Rogan controversy would affect these first-quarter subscriber numbers.
Company executives certainly don’t expect it to, but these issues take time according to Chief Executive Officer Daniel Ek. It should be noted that artists India Arie and more publicly denied to have their songs on Spotify, anymore. These claims came just before the earnings call.
Podcast Business of Spotify
The podcast and subscription audio streaming company has committed over $1 billion to its podcasting business. These exclusive shows include shows like The Joe Rogan Experience.
The show drew controversy and condemnation after it aired controversial views around the recent epidemic revolving around Covid-19. These views drew protests from many commercial artists such as Neil Young, India Arie, and Joni Mitchell.
Joe Rogan is a popular commentator who works on the internet, and he has since apologized for the views aired. Spotify has also stated that it would add content advisories on their episodes discussing Covid. It also has said that it has a ‘sizable’ content moderation team in place, as well.
Numbers and After-effects
Spotify has announced that overall consumption hours via podcasts have peaked at an all-time high and has expanded in 33 more markets. Users in countries such as Russia, Egypt, and Saudi Arabia are also engaged in paid podcasts of Spotify, which is accounting for revenue for the website.
The company’s major revenue stems from its premium subscribers. The figure rose to 180 million, which has surpassed analysts’ expectations. The expected figure was 179.9 million. Also, the quarterly revenue rose according to IBES data from Refinitiv.
Revenue from paid advertisement also rose around 40% i.e. 15% of total revenue.
It should be noted that analysts also said investors probably ignored Spotify garnering revenue from its advertising business and probably had in their minds subscriber growth as the primary source of revenue for the company.