This week look for fourth-quarter earnings releases by SiriusXM and iHeartMedia on Monday and Spotify on Tuesday. Warner Music Group (Feb. 8) and Eventbrite (Feb. 10) are slated for the following week.
According to Glenn Peoples analyst for Billboard, all eyes should be on Spotify, a bellwether company for the streaming-driven music business. Spotify is xpected to report revenue from 2.54 to 2.68 billion euros, monthly active users from 400 to 407 million, and subscribers from 177 to 181 million. Investors could ding Spotify’s share price if its numbers are on the low end of those ranges. The high end of Spotify’s fourth-quarter guidance would represent a 9 million-subscriber gain — its highest of the year but 2 million lower than the 11 million added in each of fourth quarters the previous two years.
But looking forward is more important than looking back at past performance, stated Peoples. The real numbers to watch are Spotify’s guidance for the first quarter and full-year 2022 and the implied growth in those forecasts. Solid 2020 and 2021 growth means expectations are understandably high this year. First-quarter subscriber growth is historically some of the lowest in any year: in 2021, Spotify added 3 million subscribers in the first quarter compared to 7 million in both the second and third quarters. If guidance is perceived as too low, some people might wonder if Spotify will follow the path of high-profile stay-at-home companies — such as Netflix, Zoom and Peloton — whose stocks initially benefitted from changes in how people worked, exercised and were entertained during the COVID-19 pandemic.
Stay-at-home stocks have disappointed after investors mistook temporary changes in consumer behavior for permanent shifts in how people work and live. That partly explains why Netflix’s stock sank nearly 30% in the three days following its underwhelming forecast for first-quarter subscriber growth of 2.5 million, less than half of Wall Street’s expectations and about a third lower than its subscriber additions a year earlier. It's partly why Peloton shares have cratered, the company dropped prices and sales forecasts were lowered.
But looking forward is more important than looking back at past performance, stated Peoples. The real numbers to watch are Spotify’s guidance for the first quarter and full-year 2022 and the implied growth in those forecasts. Solid 2020 and 2021 growth means expectations are understandably high this year. First-quarter subscriber growth is historically some of the lowest in any year: in 2021, Spotify added 3 million subscribers in the first quarter compared to 7 million in both the second and third quarters. If guidance is perceived as too low, some people might wonder if Spotify will follow the path of high-profile stay-at-home companies — such as Netflix, Zoom and Peloton — whose stocks initially benefitted from changes in how people worked, exercised and were entertained during the COVID-19 pandemic.
Stay-at-home stocks have disappointed after investors mistook temporary changes in consumer behavior for permanent shifts in how people work and live. That partly explains why Netflix’s stock sank nearly 30% in the three days following its underwhelming forecast for first-quarter subscriber growth of 2.5 million, less than half of Wall Street’s expectations and about a third lower than its subscriber additions a year earlier. It's partly why Peloton shares have cratered, the company dropped prices and sales forecasts were lowered.
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