Spotify Shares Rally on Strong Outlook. Can the Stock's Momentum Continue?

Shares of Spotify (NYSE: SPOT) jumped aft the euphony subscription work reported beardown Q4 results and issued upbeat Q1 guidance. Despite the banal terms jumping astir 15% successful the trading league pursuing its net report's merchandise connected Feb. 10, it is inactive down astir 18% twelvemonth to date, arsenic of this writing.

The banal was nether unit earlier this twelvemonth connected fears of gross borderline compression and the imaginable for idiosyncratic maturation to slow. However, neither of those concerns showed up successful its results oregon guidance.

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Let's instrumentality a person look astatine the company's results and prospects to spot if the banal tin proceed to rebound.

Spotify announced earlier this twelvemonth that it was raising its premium subscription prices successful the U.S. from $11.99 a period to $12.99 a period starting successful February. While the determination could person impacted its premium subscriber numbers, the institution projected 3 cardinal nett caller premium subscriber additions for Q1 to 293 million. It projected full subscribers to emergence to 759 cardinal for Q1, which was supra expert estimates of 752.45 cardinal users, arsenic compiled by Bloomberg.

Meanwhile, the institution forecast that its Q1 operating income would ascent to 660 cardinal euros ($785 million), supra expert estimates of 645 cardinal euros ($768 million). Gross borderline guidance of 32.8% besides came successful supra expectations of 32.2%. It guided for gross of 4.5 cardinal euros ($5.35 billion), conscionable shy of the 4.58 cardinal statement ($5.45 billion).

For Q4, its gross roseate 7%, oregon 13% successful changeless currencies, to 4.53 cardinal euros ($5.39 billion). Its premium gross climbed 8%, oregon 14% successful changeless currencies, to 4.01 cardinal euros ($477 billion), portion ad-supported gross fell 4% to 518 cardinal euros ($616 million), but was up 4% successful changeless currencies.

Gross borderline expanded 110 ground points to 33.1%. Premium gross margins edged up 10 ground points to 34.8%, portion ad-supported gross margins jumped 441 ground points to 19.5%. Operating income, meanwhile, surged 47% to 701 cardinal euros ($834 million).

The institution said it plans to put heavy successful artificial quality (AI) to summation personalization and heighten the idiosyncratic experience. It is besides looking to grow beyond euphony into some audiobooks and carnal books to go a implicit media platform. It's besides moved to a caller proprietary advertisement stack and expects to spot beardown advertisement maturation arsenic a result.