Balanced Near-Term Delivery vs. Medium-Term Uncertainty: Justifying a Hold on Spotify

Jason Bazinet, an analyst from Citi, maintained the Hold rating on Spotify. The associated price target remains the same with $650.00.

Jason Bazinet has given his Hold rating due to a combination of factors that balance near‑term strengths with medium‑term uncertainties. He expects Spotify’s upcoming quarterly results to largely match market expectations on key user and revenue metrics, with a modest upside to operating income driven by lower social charges rather than fundamental operational improvement. While he recognizes the company’s solid user base growth and relatively stable margins, he also anticipates that management’s guidance for early 2026 could fall slightly short of current consensus, tempering the near-term upside potential. In his view, the current valuation, reflected in the $650 target price, appropriately captures the anticipated 13% return and leaves limited room for a more aggressive rating.

At the same time, Bazinet highlights several strategic and financial variables that remain unresolved and could materially influence Spotify’s trajectory. These include the timing and impact of possible U.S. price increases, how recent international price hikes affect subscriber churn, and the eventual hit to margins from higher music royalty costs expected in 2026. He also points to uncertainty around Spotify’s evolving strategy in emerging markets, the pace and scale of improvements in its advertising-supported tier, and the financial contribution of forthcoming offerings like the Superfan tier. Taken together, these opportunities and risks create a mixed risk‑reward profile that, in his assessment, justifies maintaining a Neutral (Hold) stance rather than moving to a more bullish or bearish recommendation.