Spotify stock (NYSE: SPOT) suffered a double-digit valuation falloff today following the release of the streaming company’s Q2 2023 earnings report.
Spotify stock (NYSE: SPOT) plummeted by close to 15 percent today after the music streaming giant disclosed a widened second-quarter operating loss as well as a cautious third-quarter forecast.
When trading wrapped on Tuesday, Spotify stock was worth $140.38 per share, reflecting a 14.26 percent slip from Monday’s close. Moreover, the latter price represented a roughly five percent valuation dip from Friday, after execs kicked off this week by bumping subscription costs in north of 50 markets, among them the U.S., Canada, Mexico, and the U.K.
Even with today’s decline, though, SPOT’s value remains more than 70 percent higher than at 2023’s beginning, over double the all-time-low price of $69.28 per share that Spotify stock touched in December of 2022, and approximately 35 percent higher than SPOT’s worth in late July of 2022.
Regarding the potential causes of the material stock-price decrease, Spotify reported a substantial operating loss of €247 million ($273 million) for the second quarter – and forecasted adding just four million subscribers (compared to 10 million subscribers gained between Q1 and Q2) during the third quarter.
“To address a likely question right upfront with respect to price increases and subscriber growth,” CFO Paul Vogel relayed during Spotify’s Q2 earnings call, “our data would suggest that historical price increases have had minimal impact on growth. But given the breadth of this change and the significant outperformance in the first half of the year, there is some conservatism baked into our outlook for Q3.”
Expanding upon the point, observers have discussed the possibility that Spotify could price itself out of certain emerging markets with the heightened costs – particularly amid the rise of TikTok Music.
To be sure, fans in Brazil (where streaming accounts for the vast majority of recorded music revenue) will now have to put up R$21.90 ($4.61 at the present exchange rate) per month to access Spotify’s ad-free individual package. On the other hand, TikTok Music is available for R$16.90 ($3.56) in the nation of about 215 million.
Similarly, Spotify’s paid version will set listeners back Rp 54,990 ($3.66) per month in Indonesia (population 274 million), against Rp 49,000 ($3.26) monthly for TikTok Music.
Worth noting, however, is that TikTok Music (which has licensing deals in place with each of the major labels) only operates a paid tier in the listed countries, whereas Spotify continues to offer an ad-supported option. Meanwhile, TikTok proper unveiled a far-reaching partnership with Warner Music Group one week ago.