Spotify Shares Drop 7% on Weak Q2 Results and Soft Outlook

Spotify's stock fell sharply in premarket trading after reporting disappointing second-quarter earnings and a tepid revenue forecast. The audio streaming giant posted EPS of €0.42 ($0.49) on €4.19 billion ($4.85 billion) in revenue—missing analyst estimates of €1.82 and €4.26 billion, respectively. Currency volatility and rising operating expenses weighed on performance.

User growth offered a silver lining: monthly active users climbed 11% to 696 million, while premium subscribers ROSE 12% to 276 million, both exceeding expectations. For Q3, Spotify anticipates €4.2 billion in revenue with 710 million MAUs, below consensus projections of €4.48 billion.

The setback comes despite Spotify shares gaining 55% year-to-date prior to the earnings release. Investors now question whether the company's expansion into podcasts and audiobooks can offset slowing revenue momentum.