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Hello all -
There had already been speculation that Spotify were likely to see shares drop once its latest earnings were announced, and sure enough that has come to pass. What I found rather odd here is the contrasting responses by Wall Street to Spotify and Facebook. The former reported solid growth rates with revenue up 31% and MAUs up 28%, but that still saw shares drop to a new low, albeit before rebounding a little.
Facebook, on the other hand, reported growth that fell short of Wall St estimates along with a flatlining of growth in North America and a loss of 1m users in Europe. Despite all this, shares rose 2% immediately after the announcement, though TechCrunch reports that since then there has been some volatility. Perhaps one consideration is also that Facebook has taken a serious dive in recent months, down from a high of $217 to a low of $142 only a few days ago. Ergo, whilst shares have risen, in reality at around $151 at close of business yesterday, it is still far from any adequate recovery.
Perhaps this just boils down to simpler facts - specifically that Facebook is profitable and Spotify is not, and this is something it still needs to prove it is capable of delivering.
Have a great evening,
D.
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