Spotify Stock Drops 12.5% After €630M Q2 Income Forecast Miss
Spotify shares fell 12.5% after management guided Q2 operating income of €630M, below the €680M analysts expected, citing higher marketing and AI spending. The company reported Q1 revenue up 8% to €4.53B, 761 million MAUs (12% growth YoY) and record free cash flow of €824M.
1. Strong Q1 Performance
Spotify reported Q1 revenue of €4.53 billion, an 8% increase year-over-year, and achieved a record free cash flow of €824 million. Monthly active users reached 761 million, up 12% YoY, and adjusted EPS came in at €3.45.
2. Below-Expectations Q2 Guidance
Management guided Q2 operating income of €630 million, below consensus of around €680 million, attributing the shortfall to higher marketing and AI feature investments. Premium subscribers are forecast at 299 million, slightly under the 300 million analyst expectation.
3. Market Reaction and Analyst Views
Shares plunged 12.5%, marking the largest drop since 2023. UBS assigned a $720 price target, implying roughly 66% upside, and Citigroup maintained its Buy rating, citing robust user growth and cash flow momentum.