Why Spotify Stock Is Surging Despite Its Earnings Miss
Spotify stock is notably higher Wednesday after the audio streaming company gave an upbeat fourth-quarter outlook. Here's what you need to know.
 
 
Spotify Technology (SPOT) stock shot higher out of the gate Wednesday after the audio streaming company issued a strong profit and user forecast for its fourth quarter. This forecast is offsetting a top- and bottom-line miss for its third-quarter results.
In the three months ended September 30, Spotify's revenue increased 18.8% year over year to 3.99 billion euros, primarily driven by subscriber gains and price increases. Its net profit more than quadrupled from the year-ago period to 1.45 euros per share.
"Q3 is another standout in what you've heard me refer to as 'the year of monetization,' and we are on track for our first full year of profitability," said Spotify CEO Daniel Ek in prepared remarks. "We outperformed on both subscribers and monthly active users (MAUs), revenues were in line, and we had significant beats on gross margin and operating income. We also had another sequential – and all-time record – quarter of free cash flow."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
 
Sign up for Kiplinger’s Free 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.
While Spotify met or exceeded the outlook it provided in its second-quarter report, the results fell short of analysts' expectations. Wall Street was anticipating revenue of 4.02 billion euros and earnings of 1.72 euros per share, according to CNBC.
Spotify also said its monthly active users came in at 640 million, representing an increase of 11.5% from the year-ago period and 2.2% from the prior quarter. Premium subscribers totaled 252 million, up 11.5% year over year and 2.4% quarter over quarter. Analysts had forecast MAUs of 639 million.
For the fourth quarter, Spotify said it expects to achieve total MAUs of 665 million, total premium subscribers of 260 million, total revenue of 4.1 billion euros and operating income of 481 million euros. Analysts were anticipating monthly active users of 659.3 million, revenue of 4.26 billion euros and operating income of 432.7 million euros.
Is Spotify stock a buy, sell or hold?
Spotify has been on a roll in 2024, rising over 140% for the year to date at the time of this writing. Unsurprisingly, Wall Street is bullish on the communication services stock. According to S&P Global Market Intelligence, the consensus recommendation among analysts it tracks is a Buy.
However, analysts' price targets have failed to keep up with the large-cap stock's ascent. The average price target of $437.89 represents a discount to its current price. Analysts may very well raise their price targets in the days and weeks ahead following the earnings release.
Indeed, financial services firm Jefferies maintained its Buy rating after earnings and raised their price target to $540 from $445.
"We believe SPOT has the runway via user growth and pricing to deliver sustainable 15%+ revenue growth through 2026," says Jefferies analyst James Heaney. "We believe price increases coming every other year and bundling can help drive the next leg of growth."
Related Content
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
- 
 Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market Today Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap. 
- 
 Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t) Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history. 
- 
 Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market Today Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap. 
- 
 Targa Resources, Take-Two Interactive, Boston Scientific: Why Experts Rate These Stocks at Strong Buy Targa Resources, Take-Two Interactive, Boston Scientific: Why Experts Rate These Stocks at Strong BuyWall Street is highly bullish on these three high-quality stocks. 
- 
 Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs) Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs)Defined outcome ETFs offer a middle ground between traditional equity and fixed-income investments, helping provide downside protection and upside participation. 
- 
 This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had Holes This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had HolesA couple's disastrous experience with reclaimed wood flooring led to safety hazards and a lesson in the critical importance of detailed contracts. 
- 
 US-China Trade Hopes Send Stocks to New Highs: Stock Market Today US-China Trade Hopes Send Stocks to New Highs: Stock Market TodayApple and Microsoft are on track to join Nvidia in the $4 trillion market cap club. 
- 
 A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and Around A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and AroundIt's hard to hold your nerve during a downturn, but next time the markets take a tumble, remember this quick rock 'n' roll tutorial and aim to stay invested. 
- 
 I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth Transfer I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth TransferFocus on creating a clear estate plan, communicating your wishes early to avoid family conflict, leaving an ethical will with your values and wisdom and preparing them practically and emotionally. 
- 
 To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's Steps To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's StepsTax-loss harvesting can offer more advantages for investors than tax relief. Over the long term, it can potentially help you maintain a robust portfolio and build wealth.