Spotify Technology SA's profits fell due to a slump in the advertising sector in the third quarter driven by a gloomy global economy that raised investor concerns.
The move by advertising companies to wind down their investments has caused shares of sector giants such as Google's Alphabet to weaken, as have Spotify's shares, which are down 4% this quarter.
A report published by Spotify highlighted the decline in total profit by 58.5% this year due to a lack of investment in advertising, the fall of the currency and royalty payments to song owners.
According to Spotify Company director Daniel Ek, the company is now not too worried about the long-term impact, but it will definitely have a short-term impact, especially the profit in the quarter.
He added, this is an early indication of the market's concerns about the global economy.
Advertising investment on Spotify in the quarter grew by 19% to €385 million ($383.7 million), with double-digit increases in most places except economically troubled Europe.
The company stated that their total profits failed to meet market forecasts with a decrease of 24.7% due to a lack of investment by advertising companies as well as publishing contracts from outside the United States.
In the meantime, for the fourth quarter, Spotify's total profit is predicted to reach €3.2 billion ($3.18 billion) with an operating loss of €300 million ($298.8 million).
