Business Corpus: Spotify Stock Falls On Subscription Pricing PressureStreaming music service Spotify Technology saw its stock slide on Thursday, a day after releasing first-quarter results that disappointed investors. The post Spotify Stock Falls On Subscription Pricing Pressure appeared first on Investor's Business Daily.

[Collection]

Streaming music service Spotify Technology (SPOT) saw its stock slide on Thursday, a day after releasing first-quarter results that disappointed investors.

Spotify shares plunged more than 11% at one point but ended the regular session down 5.7% to close at 160.38 on the stock market today. The stock hit an all-time high of 171.23 on Wednesday. It went public on April 3, starting at 165.90.

Spotify added 4 million new paying subscribers to its premium on-demand music service in the March quarter. That brought its total to 75 million worldwide, in line with analyst expectations. But discount subscriptions through family and student plans reduced its average revenue per user.

The Stockholm-based company lost the equivalent of $1.24 a share in the first quarter, compared with a loss of $1.23 a share in the year-earlier period. Sales rose 26% to $1.4 billion. Spotify reports financial results in euros.

For the current quarter, Spotify expects to lose the equivalent of $121 million on sales of $1.45 billion. For the full year, it expects to lose $339 million on sales of $6.17 billion.

The Swedish company's average revenue per user (ARPU) dropped 14% year over year to $5.80.

"Growth in family and student plans continues to weigh on ARPU, as does the shift in market mix as we grow faster in relatively lower ARPU geographies, like Latin America, and launch new markets," Spotify said in a letter to investors. "Changes in foreign exchange rates also contributed to the decline in ARPU. Excluding the impact of foreign exchange rates, ARPU would have been down 6% year over year."

Spotify Price Target Cut

RBC Capital Markets analyst Mark Mahaney reiterated his outperform rating on Spotify stock, but lowered his price target to 210 from 220.

B. Riley FBR analyst Barton Crockett reiterated his neutral rating and 156 price target on the stock.

Spotify's first-quarter report showed "a continuation of premium subscription ARPU pressure … mainly on a rise of lower-priced family and student plans, and lesser developed countries, in the mix."

He added, "We continue to see these plans growing in the mix, and ARPU pressured, for as long as the eye can see."

Spotify also has a free, advertiser-supported streaming music service. It ended the quarter with 99 million monthly active users of its free service, up from 90 million in the fourth quarter. The free service is an important source of potential paying subscribers.

The company competes with Amazon (AMZN), Apple (AAPL), Alphabet (GOOGL) unit Google, Pandora Media (P) and others in the subscription streaming music business.

The post Spotify Stock Falls On Subscription Pricing Pressure appeared first on Investor's Business Daily.