Spotify reports shrinking profit margins

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Spotify says its profit margins are squeezed as the company looks to economic concerns

Spotify believes slow advertising sent its shares down 4% in the third quarter of this year.

The music streaming giant has been hurt as Google’s parent company missed its own market estimates for quarterly revenue and advertisers cut spending altogether.

At the same time, the company’s operating expenses increased 65% year over year.

In its latest report, the company said acquisitions such as Podsights, Findaway, Sonantic, Chartable, Whooshkaa and Heardle were driving the cost increase.

Shares of Spotify have fallen almost 60% this year. But the company’s general manager said Reuters he is not worried about the long term.

“It definitely affects us in the short term, and it also contributed to the gross margin impact we had this quarter,” Daniel Ek said.

Spotify’s ad-supported revenue grew 19% in the last quarter.

However, Europe remains a tough market for the music service. He believes that deteriorating economic conditions are to blame for the slump in the region.

Investors maintain that consumer spending on entertainment is suffering from the rising cost of living, alongside the effects of the pandemic and the war in Ukraine.

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