Spotify (SPOT) stock jumped more than 14% out of the gate Tuesday after the audio streaming and media company beat analysts' top- and bottom-line estimates for its first quarter.
In the three months ended March 31, SPOT reported year-over-year revenue growth of 19.5% to 3.6 billion euros thanks in part to recent price increases. The company also swung to a net profit of 97 euro cents per share vs a per-share loss of 1.16 euros in the year-ago period.
These results exceeded the consensus analyst estimate of 3.61 billion euros in revenue and earnings of 65 euro cents per share, according to CNBC.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Spotify also reported monthly active users (MAUs) of 615 million, representing an increase of 19.4% from the year-ago period and 2.2% from the prior quarter. Premium subscribers of 239 million were up 13.8% from the year-ago period and 1.3% from the prior quarter.
Spotify's premium subscribers result met its guidance for the quarter, but its MAUs result fell just shy of its guidance of 618 million.
"The business performed well in Q1, led by healthy subscriber gains, improved monetization and record strength in profitability," Spotify said in its earnings release. "Overall, we are encouraged by the strong start to the year and view the business as well positioned to deliver on the goals outlined at our 2022 Investor Day."
UBS sees more upside for Spotify
UBS Global Research analyst Batya Levi is bullish on the communication services stock, as evidenced by a Buy rating and a $375 price target, representing implied upside of nearly 19% to current levels.
"We expect SPOT to generate mid-teens revenue growth as subscriber momentum continues and price increases flow through," Levi wrote in an April 4 report. "We believe the company is on pace to show roughly 90 basis points of annual gross margin expansion, driven by stronger ad-supported margins and improvement in non-royalty expenses."
According to S&P Global Market Intelligence, the consensus analyst target price for Spotify stock is $270.04, which is about 12% below its current trading price. However, these estimates could be updated in the days and weeks ahead following the strong earnings results. Additionally, the consensus recommendation is Buy.
Related Content
-
Father’s Day 2025: These Popular Gifts Will Cost You More This YearTariffs Popular Father’s Day gift ideas like grills, clothing, and fishing gear are facing price hikes this year. Here's what to know before you shop.
-
Ask the Editor, June 13: Questions on Home Sales and TaxesIn our latest Ask the Editor round-up, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on home sales and calculating tax basis in a home.
-
Four Ways to Help Prevent a Market Downturn From Scrambling Your Nest EggYou may not be able to avoid a market decline when you're newly retired and starting to rely on your nest egg for income, but you can plan for that risk.
-
Is Your Home Disaster-Ready? An Insurance Expert's Guide to Preparing for Storms and FiresHomeowners can take these steps to protect their properties from hurricanes, tornadoes, wildfires and hail, while also potentially reducing their insurance costs.
-
Stock Market Today: Stocks Rise as Treasury Yields DropA round of not-too-terrible economic data helped boost the bond market Thursday.
-
A Financial Adviser's Defense of Annuities: They're Just MisunderstoodAnnuities can offer retirement income stability and security against market volatility, though some do have drawbacks. The key is to understand their features before buying.
-
Diversification: An Investment Adviser's Guide to Why You Need It and How to Achieve ItHow confident are you that your money will go the distance? Building a balanced portfolio can shore up your investments' long-term stability.
-
How My Dad Taught Me the Compounding Returns of FatherhoodAs Father's Day approaches, I remember how my father's small acts of love and generosity added up over time and influenced my relationships with my own children, proving that the best investments can grow across generations.
-
Stock Market Today: Stocks Lose Steam After CPI, US-China Trade DealWall Street initially cheered soft inflation data and hopeful tariff news, but momentum stalled in late-day trading.
-
June Fed Meeting: Live Updates and CommentaryThe June Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. have to say about interest rates and the economy.
