Spotify stock falls 7% on revenue miss, lackluster guidance

• Spotify shares dropped after the music streaming platform fell short of Wall Street's revenue expectations.
• Third-quarter guidance also came up short of Wall Street's forecast.
• Monthly active users on the platform jumped 11% to 696 million.

Spotify shares dropped more than 7% before the bell Tuesday after the music streaming service fell short of Wall Street's expectations and posted weak guidance for the current quarter.

Here's how the company did versus LSEG estimates:

• Loss: Loss of .42 euros vs earnings of 1.90 euros per share expected
• Revenue: 4.19 billion euros vs. 4.26 billion expected

The Swedish platform's revenues rose 10% from about 3.81 billion euros in the year-ago period. The company posted a net loss of 86 million euros, or a loss of .42 euros per share, down from net income of 225 million euros, or 1.10 euros per share a year ago.

Spotify said that higher personnel, marketing and professional services costs and 115 million euros worth of what it called social charges contributed to the results.

Third-quarter guidance came up short of Wall Street's forecast.

The company expects revenues to reach 4.2 billion euros, compared to a 4.47 billion euro estimate from StreetAccount. Spotify said the forecast accounts for a 490-basis-point headwind due to foreign exchange rates.

• Tesla plans 'friends and family' car service in California, regulator says
• Palantir joins list of 20 most valuable U.S. companies, with stock more than doubling in 2025
• Meta names OpenAI's Shengjia Zhao as chief scientist of AI Superintelligence Lab
• Inside Tesla's new retro-futuristic Supercharger diner

Monthly active users on the platform jumped 11% to 696 million, while paying subscribers rose 12% from a year ago to 276 million.

For the current quarter, Spotify said it expects to reach 710 million monthly active users, with 14 million net adds. The company expects 5 million net new premium subscribers in the third quarter to reach 281 million subscriptions.

During the period, Spotify said it rolled out a request feature for its artificial intelligence DJ. The company said engagement with the offering has roughly doubled over the last year. Its audiobooks feature expanded to four new countries during the quarter.

Earlier this year, an indie rock band on the platform known as Velvet Sundown gained media attention after it quickly captured over a million new listeners and raised questions over artificial intelligence use in music creation. The “band” was later confirmed to be mainly AI-generated after widespread speculation.

In 2024, Spotify posted its first full year of profitability as reduced costs and focused on subscriber gains. Spotify said it ended the quarter with more than 7,300 full-time employees. Shares are up 57% this year.

Spotify also upped its share repurchase program by $1 billion.