Shares of Spotify tumbled as much as 10 percent on Wednesday after the Swedish streaming giant warned that its strong pandemic growth is beginning to taper off.
While at-home streaming has boomed during the pandemic, Spotify Chief Executive Daniel Ek cautioned that uncertainty lies ahead as some of its established markets emerge from the pandemic, while some of its newer markets face volatility amid a resurgence of the coronavirus.
Price hikes in select markets may also be contributing to the slowdown Ek said.
“Some markets are more advanced in recovering, some are still very much in the sort of pandemic landscape and I think that’s going to play out over the course of the year,” Ek said in an interview Wednesday.
The music streamer — which now has 2.6 million podcasts on its platform, including the massively popular “The Joe Rogan Experience” — said it expects paid subscribers in the range of 162 million to 166 million in the second quarter.
Analysts forecast it to hit 166.1 million.
Shares of Spotify were recently down 8.9 percent to $266.81 a share.
During its first quarter ended March 31, Spotify reported 356 million total monthly subscribers, up 24 percent from a year ago but at the low-end of its guidance. The all-important paying subscribers ticked up 21 percent to 158 million, however, which was at the top-end of expectations.
Revenue rose 16 percent to $2.6 billion, beating forecasts of $2.59 billion.
The company launched its service in 86 new countries in the first quarter, and said that growth in the US and in markets like Russia and India where the company discounted plans and charged lower prices offset lower-than-expected growth in Latin America and Europe.
The slowed growth in Latin American and Europe may be attributed to price hikes that Spotify began implementing last fall. During the quarter it extended increases to another 25 markets, including Latin America and Canada. This week, Spotify notified customers of price adjustments in another 12 markets, including for the family plan in the US and the UK. Spotify said the increases have shown no negative impact so far.
Nonetheless, Ek said he is seeing the “early inklings” of pent-up demand in new markets, as the company strives to reach 1 billion users.
Looking ahead, Spotify said it expects to reach at least 402 million monthly subscribers and at least 172 million paying subscribers by year’s end. It also forecast total revenue in a $2.61 billion to $2.85 billion range for the second quarter. Analysts expected revenue of $2.75 billion.