Spotify’s stock dropped nearly 5% in early trading on Wednesday, to $149 per share, despite the music streaming giant posting strong Q2 revenue growth. The reason: underwhelming subscriber growth.
“We missed on subs,” Spotify said in its letter to shareholders. “That’s on us.”
Spotify added 8 million paid subscribers during the second quarter, bringing the Stockholm-based company to 108 million paying customers overall. The new subscribers came in below the midpoint of Spotify’s projections, though, after the company forecast it would have between 107-110 million paid subscribers by the end of the quarter.
Altogether, Spotify reported it had 232 million monthly users, including paying customers and ones on free accounts.
Apple Music, Spotify’s chief competition, shared it had reached 60 million paying customers at the end of June.
Spotify did narrowly edge past analyst revenue estimates, bringing in $1.87 billion compared to the $1.81 that was expected. The company lost less money than expected, too, posting a loss of 47 cents per share; analysts had anticipated it would lose 51 cents per share.
Average revenue per user dipped 1% from the same time last year to $5.41. Spotify said it expects ARPU to continue sliding during the second half of 2019 as “a result of shifts in both product and geographic mix.”
Spotify teased its investors a bit in its letter to shareholders, saying it had signed new deals with “two of the major four labels” — Sony, Warner, Universal and BMG — without specifying which companies it had renewed with. The company added it was in “active” negotiations with the other two companies. CEO Daniel Ek declined to share an update on Spotify’s earnings call.
Overall, Spotify has pleased Wall Street and investors this year, opening 2019 at about $114 per share.