Spotify shares drop on muted outlook

Spotify reported strong quarterly subscriber growth Wednesday, but offered a subdued forecast for the current quarter, sending its shares down sharply.

The streaming music and podcast service that boomed as people stayed home amid the health crisis forecast that paid subscribers – its most profitable customers – would grow to around 162 to 166 million in the current quarter. That falls just a shade short of forecasts.

That muted outlook - as the company faces growing competition from the likes of Apple Music and Amazon Music - overshadowed the service’s upbeat quarterly growth in the U.S., Mexico, Russia and India.

CEO Daniel Ek told Reuters he’s encouraged by the pent-up demand he has seen in new markets. Spotify launched services in 86 countries in the first quarter.

During those three months, Spotify’s premium subscribers grew 21% to 158 million. That was roughly in line with Wall Street’s forecasts.

The company also launched several new products, partnered with Facebook, and unveiled a paid podcast subscription platform, one week after Apple.