Shares of Spotify (SPOT) rose 7% in after hours trading as the audio-streaming company forecast bullish guidance for the current fourth quarter that surpassed Wall Street expectations.
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The strong guidance and rising share price come despite the fact that the Swedish company’s third-quarter financial results missed Wall Street forecasts on the top and bottom lines. Spotify announced earnings per share of $1.46, which missed the consensus forecast of $1.85.
Quarterly revenue of $3.99 billion also fell short of the $4.02 billion expected on Wall Street. Regardless, investors appear to be cheering the company’s outlook and the number of paying subscribers it has on its audio streaming platform.
Subscriber Growth
Spotify said it had 252 million paying subscribers at the end of September this year, beating analysts’ estimates of 250.1 million. Total monthly active users increased to 640 million, also exceeding Wall Street targets.
Looking ahead, Spotify said that ongoing cost cuts and strong subscriber growth in the year’s current fourth quarter, which includes the year-end holidays, should drive its operating income to $509.76 million. In recent months, Spotify has raised prices for its plans in the U.S. and Canada to capitalize on demand.
The company expects to add about eight million premium subscribers in the current quarter, which would take the total to 260 million. SPOT stock has risen 123% so far this year.
Is SPOT Stock a Buy?
Spotify stock has a consensus Strong Buy rating among 14 Wall Street analysts. That rating is based on 13 Buy and one Hold recommendations issued in the last three months. There are no Sell ratings on the stock. The average SPOT price target of $431 implies 2.77% upside from current levels.
