Spotify (SPOT) stock was up about 2% in Friday’s pre-market trading after Goldman Sachs upgraded its rating for the music streaming giant to Buy from Hold, ahead of the company’s fourth-quarter results on February 10. Goldman Sachs analyst Eric Sheridan lowered his price target for SPOT stock to $700 from $735. The revised price target still indicates an attractive upside potential of 40% from current levels. Sheridan believes that the 28% pullback in SPOT stock since the beginning of October 2025 offers an attractive buying opportunity, given the “long-term secular growth themes.”
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Meanwhile, Wall Street expects Spotify’s Q4 2025 earnings per share (EPS) to rise by 55% year-over-year to $3.18.
Goldman Sachs Turns Bullish on Spotify Stock
Sheridan believes that Spotify is well-positioned to benefit from the growing adoption of generative artificial intelligence (AI). His optimism is based on the following factors:
- Spotify’s dominant position among distribution platforms
- Presence across various media types
- Relationships with both large music labels and independent artists and content creators
- “Structural data advantage and existing scaled products to facilitate AI/ML-driven discovery/curation”
Over the long term, Sheridan is confident about Spotify’s growth, backed by a consistent increase in premium subscription prices, the rollout of new premium pricing tiers, and encouraging growth in monthly active users (MAUs), particularly in emerging markets. The 4-star analyst also cited continued conversion of ad-supported users into paid subscribers and the reacceleration of ad revenue growth in 2026 and the year ahead, driven by the launch and ramp-up of the Spotify Ad Exchange (SAX) and programmatic ad-buying capabilities, as well as monetization of video podcast ad inventory.
Additionally, Sheridan expects strong improvement in gross profit dollar growth and margin, fueled by a slight improvement in unit economics for the core Music product, leverage on fixed expenses, and expansion of high incremental gross margin revenue streams in Advertising.
Is SPOT a Good Stock to Buy?
Heading into Q4 2025 results, Wall Street has a Strong Buy consensus rating on Spotify stock based on 18 Buys and six Holds. The average SPOT stock price target of $729.52 indicates 46.3% upside potential.
