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Yahoo Finance media reporter Allie Canal joins us for a live show to discuss Spotify’s share drop and what investors should expect from its Q1 earnings report.
video transcript
[AUDIO LOGO]
Sean Smith: Spotify’s stock is trading lower ahead of its first-quarter earnings report tomorrow morning. Here’s a preview of Yahoo Finance’s Alexandra Canal. Ali, what can we expect?
Alexandra Canal: Well, I think the big things that investors will be looking at will be centered around improving margins and conversations around these subscription fees, right? However, competitors have raised prices, and it seems unlikely that prices will rise, especially with this significant increase in profitability.
On top of that, Spotify has made some very large investments in the podcast space, totaling $1 billion, and these investments are eroding margins so potentially higher prices could offset that. There is a nature. Even during the last earnings call, CEO Daniel Ek admitted to overinvesting, but said the company would be tougher on investments this year.
They have already cut headcount and eliminated certain initiatives like a live audio initiative called Spotify Live. So, overall, Wall Street is very bullish about these potential short-term catalysts.
There will be some headwinds now, especially macro pressures related to advertising and foreign exchange as the dollar continues to be strong against other currencies. But the outlook is bright. Here are the metrics to watch tomorrow morning: Bloomberg’s consensus forecast still shows a loss per share, but an improvement from the fourth quarter. Total monthly active users are expected to reach 502 million. But again, I think investors are listening closely for updates and comments on margin improvements, pricing, and that macro environment.
Sean Smith: have understood. Sure, we hear about it. So far, year-to-date share has increased by about 60%.
Alexandra Canal: yeah, 60%.
Sean Smith: Certainly an outperformer since January 1st. Alright, Ali Kanal, you’re the best. thank you.
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