Spotify’s profit estimates have been hit, and investors are worried about this new metrics report.
Its shares fell 10% in premarket trading after a new forecast report Tuesday that second-quarter earnings and premium subscribers came in below estimates, indicating slowing growth in the Swedish streaming giant’s key markets in Europe and North America.
The company has tried to increase profitability in recent years through price increases and cost-cutting efforts, as well as AI features that improve search and engagement on its platform.
Led by Gustav Soderström and Alex Norström after founder Daniel Ek became executive chairman in January, Spotify competes with rival products from Apple and Amazon.
Co-CEO Soderstrom told Reuters that Spotify is investing heavily in marketing efforts and new features, including the computing power needed for AI, rather than expanding its workforce.
Spotify Stock Underperforms the S&P 500 Index:
The company expects operating income of 630 million euros ($736.41 million) for the second quarter, below the LSEG-compiled analysts’ average estimate of 684 million euros.
This is in sharp contrast to Spotify’s record operating income of 715 million euros in the first quarter, which beat estimates of 681.6 million euros due to lower payroll taxes.
Such taxes, called social charges, are tied to the value of a company’s share price, as lower stock prices can lead to a decline in the fee. Spotify shares have fallen nearly 15% this year after rising nearly 30% in 2025.
Spotify’s new users are falling from Europe, North America
CFO Christian Luiga said Spotify is going to ship “a lot of features” in the middle of this year, which will increase operating expenses over the next few quarters.
New AI features introduced by Spotify include adding voice interaction to its personalized music tool AI DJ and introducing AI Playlists to curate playlists using natural-language prompts.
Earlier this month, the company also expanded its Prompted Playlist feature, which lets users create playlists based on their listening habits, to include podcasts.
Additionally, Spotify’s forecast number of monthly active users was 778 million, above the estimate of 773 million, while its forecast of premium subscribers to 299 million, with an increase of 6 million, was below the estimate of 302 million.
Spotify Premium subscribers by region:
Premium subscribers grew 9% to 293 million in the first quarter. A net increase of 10 million in its MAUs took the total to 761 million.
