Should Spotify Investors Worry About Soft Ad Sales?
Audio-streaming veteran Spotify Technology (NYSE: SPOT) reported robust third-quarter results by most measures. The company added 7 million premium subscribers and 23 million monthly active users (MAUs) during the quarter. In addition, revenue rose 21% year over year, driven by healthy subscription fees. That's more than a healthy business -- the results were downright impressive.
Yet investors reacted to Spotify's report with a brutal haircut. The stock fell more than 9% in Wednesday's morning session, extending a painful downtrend. Spotify shares have lost roughly 60% of their value in 2022.
This time, the negative market move sprang from Spotify's disappointing sales of advertising space. Ad-supported revenue increased just 3% year over year on a constant currency basis. That segment barely squeaked out a gross profit at a gross margin of 1.8%, down from 10.8% in the year-ago period.
Source Fool.com
