Spotify stock rose about 5% in premarket trading after the company guided fourth-quarter operating income above Wall Street estimates. Revenue narrowly missed and the monthly active user forecast came in slightly below expectations, so investors are weighing profit gains against audience growth.
Spotify stock rallied 5% in premarket trading after its third-quarter earnings report. The company projected fourth-quarter operating income above Wall Street estimates and forecast robust Premium subscriber additions.
Q4 profit forecast tops estimates
Spotify reported third-quarter revenue of €4.97 billion, slightly below analysts' €4.98 billion estimate. Operating income reached €672 million, broadly matching the expected €671.8 million.
The guidance carried more weight. Spotify expects fourth-quarter operating income of €820 million, topping the €813.4 million consensus estimate. Coinpedia notes the difference is relatively small.
Premium subscribers up, audience outlook softer
Spotify also expects to add 10 million Premium subscribers in Q4, taking its paid subscriber base to 316 million. That forecast exceeded analysts' expectations.
However, the broader audience outlook was less encouraging. Spotify forecast 818 million monthly active users, below analysts' estimate of 819 million.
Price levels to watch
SPOT closed at $526.08 on October 21, with an intraday range of $508.01 to $530.75. The pre-market opening price sits around $548-$550.
The $530-$540 area is an initial level to watch because it was near the upper end of the previous session's range. A sustained move above it, supported by strong trading volume, could reinforce the bullish reaction.
If the stock fails to hold its gains, the $508 area is the next crucial zone for potential downside support, based on the prior session's low. A break below it could indicate that investors are selling into the earnings reaction or remain concerned about the revenue and user-growth shortfalls.
Source: Coinpedia
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