Tonight, before the U.S. market opens, Spotify reports its Q3 results.
Its Q2 gross margin just hit a record 33.4%, but Q3 guidance came in at only 32.9%. The gap is hard to miss.
Investors are asking for more: they want 33.1% for Q3 and 33.7% in Q4 guidance, while Wall Street’s actual Q4 expectation is 33.9%. The three numbers don’t line up.
The subscriber base is still holding up: Premium ended last quarter at 300 million, up 9% year over year. This quarter’s guidance targets 305 million, with a monthly active user target of 788 million. The user base isn’t shrinking.
Analysts are already making noise: Jefferies raised its price target to $620, saying Spotify is “highly immune to the impact of AI.” Its AI mixing tool, developed with Warner, is due to launch by year-end. Morgan Stanley went straight to $640.
But the stock is at $525, still more than 20% below its 52-week high, and down 22% over the past year. The more bullish the calls get, the more hesitant the stock seems to be.
I think tonight’s key question isn’t subscriptions, but whether gross margin can hold the 33% line. If it can’t, the “profit story” is just a PowerPoint.
My thesis is invalidated if Q3 gross margin comes in at 33.1% or higher and Q4 guidance is raised to above 33.9%. If that happens, I’ll take this back.
Are you betting on gross margin delivering tonight, or on subscriptions beating expectations?
$SPOT $WMG
#美股财报 #Spotify
This is not investment advice. DYOR. Trading involves risk.
Its Q2 gross margin just hit a record 33.4%, but Q3 guidance came in at only 32.9%. The gap is hard to miss.
Investors are asking for more: they want 33.1% for Q3 and 33.7% in Q4 guidance, while Wall Street’s actual Q4 expectation is 33.9%. The three numbers don’t line up.
The subscriber base is still holding up: Premium ended last quarter at 300 million, up 9% year over year. This quarter’s guidance targets 305 million, with a monthly active user target of 788 million. The user base isn’t shrinking.
Analysts are already making noise: Jefferies raised its price target to $620, saying Spotify is “highly immune to the impact of AI.” Its AI mixing tool, developed with Warner, is due to launch by year-end. Morgan Stanley went straight to $640.
But the stock is at $525, still more than 20% below its 52-week high, and down 22% over the past year. The more bullish the calls get, the more hesitant the stock seems to be.
I think tonight’s key question isn’t subscriptions, but whether gross margin can hold the 33% line. If it can’t, the “profit story” is just a PowerPoint.
My thesis is invalidated if Q3 gross margin comes in at 33.1% or higher and Q4 guidance is raised to above 33.9%. If that happens, I’ll take this back.
Are you betting on gross margin delivering tonight, or on subscriptions beating expectations?
$SPOT $WMG
#美股财报 #Spotify
This is not investment advice. DYOR. Trading involves risk.