Music streaming and podcast company shares Spotify Technology (NYSE: SPOT) fell 18.9% in early trading Thursday after reporting fourth quarter results. Shares were down 15.9% at 11:50 a.m. ET today and rebounding near a 52-week low.
Spotify saw a 24% increase in revenue in the quarter to $2.7 billion, as the total number of monthly active users jumped 18% to 406 million. The company reported a net loss of $39 million, or $0.21 per share. On an adjusted basis, the loss was $0.24 per share, which easily exceeded the $0.48 loss analysts expected.
It was the company’s advice that made investors ask for more. Spotify expects to have 418 million users by the end of the current quarter with 183 million premium subscribers, up slightly from 180 million premium subscribers last quarter. Gross margin is also expected to fall to 25% from 26.5% in the fourth quarter as the company experiences currency headwinds and high costs to grow its podcast business.
Investors seem disappointed with Spotify’s expected growth rate and the fact that management is no longer providing guidance for the full year. But looking at the company trends, I still think it’s a solid company. Double-digit user and revenue growth is the envy of most companies, and we’re seeing Spotify move closer to profitability as its advertising grows.
As a long-term investor, I see this as a buying opportunity in a well-positioned growth stock, despite what the market thinks.
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Travis Hoium owns Spotify technology. The Motley Fool owns and recommends Spotify technology. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.