Please ensure Javascript is enabled for purposes of website accessibility

Why Spotify Stock Is Soaring Today

By Anders Bylund - Oct 28, 2019 at 12:56PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The music-streaming specialist crushed its own guidance in Monday's third-quarter report.

What happened

Shares of Spotify Technology (SPOT -3.46%) are hitting a sweet note today thanks to a strong third-quarter earnings report. The music-streaming veteran's stock rose as much as 18.4% earlier this morning and still trades 14.2% higher as of 12:10 p.m. EDT.

So what

In the third quarter of 2019, Spotify reported earnings of $0.42 per diluted share on revenue of $2 billion. That's a 62% year-over-year increase on the bottom line on 34% stronger sales. These growth rates include a 4% currency translation tailwind, as the U.S. dollar rose that much in comparison to the euro, which is the Swedish company's reporting currency. The number of monthly average users rose 30% year over year to 248 million and premium subscribers increased by 31% to 113 million.

Spotify's strong growth rested chiefly on high interest in its premium podcast services. All of these figures landed at or above the top end of management's guidance for the third quarter.

A young woman wearing headphones stares in wide-eyed amazement at her phone.

Image source: Getty Images.

Now what

CFO Barry McCarthy also chose this moment to announce his retirement from his post, effective Jan. 15, 2020. The former Netflix CFO will stay connected to Spotify as a board member, having achieved the goals of taking Spotify public and setting up a solid successor.

A CFO transition is often enough to spark a selling spree, especially in richly valued growth stocks like Spotify. The complete lack of trader panic today is a testament to Spotify's fantastic financial results.

Anders Bylund owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix and Spotify Technology. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Spotify Stock Quote
Spotify
SPOT
$115.56 (-3.46%) $-4.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
379%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.