Why Spotify Stock Popped 20.5% In July
Shares of Spotify (NYSE: SPOT) popped 20.5% last month, according to data from S&P Global Market Intelligence. The global leader in music streaming and podcasts released a strong second-quarter earnings report, sending the stock soaring in July. A rise of 9.1% for the S&P 500 in July also helped propel shares higher.
On July 27, Spotify released its earnings results for the three months ending in June. Revenue was 2.86 billion euros, ahead of the 2.81 billion-euro estimate from analysts, while earnings per share (EPS) hit a loss of 85 cents (in euros) versus a 63-cent loss estimate. Even with these mixed results, investors still decided to bid up Spotify stock following the report and are not worried about the company losing money at the moment. As long as revenue keeps growing at 20%+ a year (as it did last quarter), investors will likely be OK with Spotify's negative profits.
So what drove this revenue beat? First, it came down to great growth from both premium subscribers and total monthly active users (MAUs) in the period. Spotify had 433 million MAUs in Q2, 5 million ahead of its previous guidance, and 188 million premium subscribers, 1 million ahead of its previous guidance. The company is also seeing strong growth from its ad-supported segments (both music and podcasts), with revenue growing 31% year over year in the first quarter.
Source Fool.com
