📖 Spotify reported fourth quarter 2020 earnings on Feb, however missed analysts' earnings expectations, sending the stock down 8%. Revenue jumped 17% versus a year ago to $2.58 billion, and net loss was $125 million, or $0.79 per share on an adjusted basis. Analysts were expecting revenue of $2.61 billion and a loss of $0.69 per share. Despite this, Spotify's monthly active users (MAUs) rose 27% year over year to 345 million during the fourth quarter, hitting the top end of its prior guidance for 340-345 million MAUs. Its total number of premium subscribers increased 24% year over year to 155 million, which beat its own forecast for 150-154 million subscribers. Its number of ad-supported MAUs grew 30% to 199 million. Ad revenue rose 29% year over year to 281 million euros ($338 million). Spotify posted a gross margin of 26.5% in the fourth quarter -- up from 24.8% in the third quarter and 25.6% in the prior year quarter -- which surpassed its previous guidance of 24.2%-26.2%. Spotify is clearly growing, just not at the pace that analyst expected
What was interesting from the earning report is that 26% of MAUs engaged with podcast content on Spotify, which is up from 23% in the previous quarter. This is pretty impressive given that podcasts were only introduced on Spotify in 2015. Spotify has recently ramped up its focus on Spotify, signing Joe Rogan, Kim Kardishian and Michelle Obama in deals that have cost hundreds of millions of dollars. The podcasting industry will enjoy an estimated compound annual growth rate of 27.5% through 2027, accompanying 17.8% growth for music streaming, according to Grand View Research. Research by MIDiA suggests Spotify now has majority market share in the podcasts industry accounting for 42% of podcast listeners versus 35% with Apple Music.
Its worth noting that since the disappointing earring call, Ark Invest has added over 584,000 shares to its ARKK and ARKW ETFs. This was $209,000,000 of shares added. Ark now owns over $1 billion of Spotify stock. Ark is clearly bullish on Spotify.
📈Spotify is currently 16% down from its intra-day high of $370. Interestingly, Spotify's price has been range bound for much of the past 8 months. The gap down has created a double bottom in the most recent price range and price has found support previously at $306 to $308 where price is now. Traders should be careful as there is further support at $292 which price may be attracted too. Price is currently also being supported by a bullish channel which price recently bounced off. It is worth that trend lines and price channels are subjective. Price has recently retraced to the 0.5 Fibonacci level. There is also some hidden bullish RSI divergence - RSI is making lower lows but the price is flat. Should price move higher it may reach the -0.13 price extension, which could see 24% upside.
🔎This is not financial advice. Always do your own research and due diligence. Always wait for directional confirmation before entering a trade.