During the December quarter, the company signed big names including Prince Harry and Meghan Markle, and Ava Duvernay. The company’s recent move into audiobooks, by experimenting with recordings of celebrities reading books like Frankenstein, has proven very popular, while it is also becoming the leading name in podcasts. Spotify bet big on investments outside of music in 2020. Spotify’s gamble on audiobooks and podcasts Investors expressed disappointment in the company’s 23.7% to 25.7% 2021 gross profit margin (GPM) forecast too, which calls for no improvement on Q4 2020’s GPM of 26.5%. The company may be expecting to lose money but it is spending that money on targeting 1.5 million new subscribers and hopes monthly active users to jump to 359 million.

For the full year, Spotify forecasts losing $300 million on revenue of $11.06 billion. Shareholders were less than impressed with Spotify’s forecast of $63.6 million in losses on sales of $2.51 billion in the first quarter of 2021. Investors won’t be surprised to see Spotify record losses though as it is still pre-profit and is continuing to invest in growth opportunities. Overall, the media service provider posted a loss of $149 million, down from the $250 million loss it made in 2019. The company’s ad-supported business is very important as Spotify has proven that it can convert more than 40% of these users to paid subscribers over time, making it an important indicator of future paid user growth. Total monthly users also rose 27% to 345 million. Spotify attributed this to discounted plans and the lower prices it charges in Russia and India. Despite this growth, average revenue per user fell by 8% to $5.13 year-over-year (YoY). This surge smashed analyst expectations of just 9 million new subscriber additions. However, Spotify did add 11 million new paying subscribers in the quarter, bringing it to a total of 155 million premium users globally. The Swedish-based company recorded a loss of $0.79 per share on sales of $2.58 billion in Q4 versus an expected loss of $0.69 per share on sales of $2.61 billion. However, the company’s earnings and outlook disappointed investors, causing the stock to fall as much as 8% in trading on Wednesday.

Spotify (NYSE: SPOT) topped Wall Street’s estimates for paid subscribers and total user growth in its fourth-quarter report on Wednesday.

Spotify stock losses