Spotify Technology shares fell more than 8% in trading on Tuesday after the company reported operating profit that missed investor expectations. Despite strong subscriber growth in the first quarter, profit of €509 million fell short of the €548 million forecast. Spotify said social charges and taxes were €76 million higher than expected due to the stock’s earlier gains in the first quarter.
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Spotify’s stock has more than doubled in the past 12 months, up 22% in the first quarter of 2025. The company has seen significant subscriber growth during that period, proving the success of its streaming strategy and the profitability of expanding into audiobooks and podcasts, even as subscription prices have risen.
Analysts attribute today’s sharp drop in Spotify shares to investors’ dissatisfaction with the company’s current financial results. “There may be some hype in the short term, but we remain confident in the long term and the direction we are headed seems clearer than ever,” Spotify CEO Daniel Ek responded to the stock’s drop.
Monthly active users increased 10% to 678 million, slightly below the 679 million expected. Spotify forecast 689 million monthly active users for the current quarter, below the 694.5 million analysts had forecast.
Spotify reported a 12 percent increase in paid subscribers to 268 million, nearly 3 million ahead of forecasts. Revenue of €4.2 billion was in line with Spotify’s expectations and analysts’ estimates. For the second quarter, Spotify forecasts subscriber growth to 273 million and operating income of €539 million.
Bloomberg financial analysts believe that despite the overall uncertainty, “the competitive moat is deepening and the long-term outlook is positive with several levers such as potential price increases, a new subscription tier, more extensive advertising and new features such as video podcasts.”
Spotify has expanded its reach significantly over the past year, adding audiobooks and podcasts, and recently turned its attention to video content. In January, the company launched a partnership program in which creators’ income depends on the number of paid subscribers who consume their content. Since the beginning of the year, the service has already paid out $100 million to participants in this program.
While expanding into new areas of business, Spotify has focused on raising prices and increasing profitability. Last year, the company raised subscription prices in several key markets, including the U.S., and plans to raise prices in Europe and Latin America this year.
Spotify is currently developing a Music Pro subscription, which will be significantly more expensive but will offer high-quality audio and other advanced features. Hidden code in the Spotify app gives an idea of what users can expect from the new Music Pro plan. The most notable improvement will be support for the lossless format. Spotify will open access to FLAC audio files (quality up to 24-bit / 44.1 kHz).
Music Pro subscribers are expected to have access to a new remix feature that will allow you to “speed up, mix and otherwise edit” tracks. Spotify developers intend to optimize the sound of content for certain models of headphones. The appearance of AI-based features, such as advanced filters for searching and creating playlists, cannot be ruled out. The cost of the Music Pro plan is not yet known.