Spotify Stock Falls After Investor Update Showing 2020 Operating Loss was Four Times That of 2019 Despite Beating Active User Goals for 4th Quarter

Spotify stock has fallen by as much as 9 percent, the largest drop it’s experienced since November, following an investor update regarding the company’s financial situation, including their 2020 operating losses. According to Music Business Worldwide, Spotify’s 2020 calendar year saw a loss of $335 million, more than four times what it posted in the previous year. Spotify’s pre-tax loss in 2020 (minus additional finance-related costs) was $810 million, five times the company’s equivalent loss in 2019.

The company did see some gains as well however, adding 25 million customers to reach 345 million monthly active users, ahead of Spotify’s expected 343 million. Premium subscribers also reached 155 million, up 24 percent year-over-year. The company’s revenue reached somewhere between $10.93 billion and $11.41 billion in revenue.

The influx of users is considered a drawback for some, as the company believes that the platform will add fewer net subscribers this year as opposed to 2020. Despite this prediction, Spotify CEO Daniel Ek remains confident that the platform is a “multi-billion user opportunity” in the long term. “As I mentioned in my opening remarks, all that said, we are facing a global pandemic and that pandemic has shifted all user behaviour in 2020,” Ek explained, later adding: “There is more uncertainty throughout the year on what will happen to the subscriber growth, so again [what] we are forecasting means that we do the things that we’re only very, very certain that we will deliver upon.”

Spotify is also reportedly working on adding new social features, such as the ability to comment on a track (like Chinese platform Tencent Music), the ability to create audio-centric posts similar to Clubhouse and monitoring speech to recommend music. Ek has also indicated that the platform might raise prices as one of “three legs to a stool.”

Last fall was a turbulent time for Spotify, which had 300,000 accounts affected by a credential stuffing attack late last year. Comments made by Ek also spearheaded number of negative responses from musicians across the music industry, making mxdwn’s top stories of the year.