Spotify plunges 19% after the audio-streaming platform offers disappointing outlook on user growth

• Spotify stock tumbled as much as 19% on Thursday on weak guidance for subscriber growth.
• Spotify expects to add 183 million paid subscribers in Q1, nearly flat from Q4 and below some estimates.

Spotify stock sharply slid Thursday following a soft outlook on user growth that threw the spotlight off the streaming company's strong fourth-quarter results.

Late Wednesday, Spotify said it expects to add 183 million paid subscribers in the first quarter, nearly flat from the fourth quarter and below some analysts' estimates of 184 million.

The weak guidance follows criticism that the platform's popular "The Joe Rogan Experience" program was spreading misinformation about vaccines and coronavirus. More top musicians are taking their songs off the streaming service. Spotify earlier this week said it will add an advisory to content that included discussions about COVID-19.

But co-founder and CEO Daniel Ek said in the company's earnings call with analysts late Wednesday its first-quarter subscription forecast doesn't reflect any churn from the Rogan controversy.

"In general, what I would say, it's too early to know what the impact may be. And usually when we've had controversies in the past, those are measured in months and not days. But I feel good about where we are in relation to that, and obviously, top-line trends looks very healthy still," said Ek, according to a transcript.

Still, shares dropped as much as 19% to an intraday low of $155.57, the lowest price since May 2020. The loss was later pared to 17%. The stock this year through Wednesday's close had fallen by about 18%.

Meanwhile, Spotify posted better-than-anticipated top- and bottom-line numbers for the fourth quarter. Its per-share loss of €0.21 was smaller than the Refinitiv consensus estimate of €0.43 a share. Revenue rose 19% to €2.69 billion compared with an estimated €2.65 billion.

Premium subscribership increased by 16% to 180 million in the fourth quarter, stemming from a strong promotional campaign.

Total monthly active users in the fourth quarter rose by 18% to 406 million year over year, with Spotify saying that figure was near the top end of its guidance range and that it landed double-digit growth in all regions.