Spotify Technology SA (NYSE:SPOT) sold off sharply after the digital music company reported first-quarter results that were better than a year earlier but apparently were not as strong as investors had hoped.
Shares of Spotify were down around 8% in late-morning trading, at $US156 a share, despite results that largely were in line with analyst estimates.
Spotify said its net loss in the first quarter totaled €161mln (US$202mln), or €1.01 (US$1.21) a share, which was smaller than its net loss of €173mln (US$207mln), or €1.15 (US$1.38) a share, in the first quarter of 2017.
Revenue at Spotify rose 26%, to €1.14bn (US$1.37bn) from €902mln (US$1.08bn).
READ: Spotify shares slump in quarterly earnings debut
JPMorgan analyst Doug Anmuth said Spotify reported "solid" first-quarter results but that the Street expected more upside in the company's first quarter as a public company. Anmuth said he sees Spotify shares likely pulling back in the near term but notes his positive thesis is unchanged. The analyst kept an Overweight rating on the stock with a US$190 price target.
Meanwhile, RBC Capital analyst Mark Mahaney lowered his price target on Spotify to US$210. Mahaney said while monthly average user growth at Spotify matched expectations, the premium Average Revenue Per User metric was slightly below forecasts. Mahaney kept his Outperform rating on Spotify, noting that the company is a global leader in the streaming music trend
Spotify reported that ad-supported monthly average users (MAUs) totaled 99 million at the end of the first quarter, which was up 21% year over year and 9% quarter over quarter. Spotify said it continues to see "strong growth in emerging markets, particularly Asia given our recent launches in Vietnam and Thailand, as well as increasing momentum in Japan."
The company said premium subscribers grew to 75 million, up 45% year over year.