Spotify (SPOT) AI Stock Analysis

• Market Cap: $98.30B
• Dividend Yield: N/A
• Average Volume (3M): 3.56M
• Price to Earnings (P/E): 39.1
• Beta (1Y): 0.97
• Revenue Growth: 14.10%
• EPS Growth: 102.32%
• Country: US
• Employees: 7,258
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 5.24
• Shares Outstanding: 205,832,520
• 10 Day Avg. Volume: 4,333,444
• 30 Day Avg. Volume: 3,555,647
• PEG Ratio: 0.58
• Price to Book (P/B): 12.19
• Price to Sales (P/S): 6.15
• P/FCF Ratio: 36.51
• Enterprise Value/Market Cap: 0.84
• Enterprise Value/Revenue: 4.83
• Enterprise Value/Gross Profit: 15.10
• Enterprise Value/Ebitda: 34.94
• 1Y Price Target: $670.52
• Price Target Upside: 36.67% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 25
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 65 Neutral
• Price Target: $527.00 ▲(7.42% Upside)
• Action: Reiterated Date: 02/12/26
• Date: Action: Reiterated 02/12/26

The score is driven primarily by materially improved profitability, margins, and strong free cash flow, reinforced by constructive Q1 2026 guidance and management’s expectation for further margin and cash flow gains. These positives are tempered by very weak technicals (sharp downtrend with negative momentum) and a premium valuation that leaves less room for execution missteps, alongside near-term risks around advertising softness, FX headwinds, and potential churn from pricing.

Positive Factors

Margin expansion and profitability

Material margin expansion from prior losses to sustained operating profitability indicates durable operating leverage. Higher gross and operating margins enable reinvestment, support buybacks and debt flexibility, and improve resilience to slower ad cycles, strengthening long-term cash generation.

Strong free cash flow and cash reserves

Robust FCF and a large cash stockpile provide strategic optionality: fund product investment, opportunistic buybacks, repay convertible debt, or pursue M&A. High FCF conversion to net income signals earnings quality and reduces reliance on capital markets over a multi‑quarter horizon.

Scale and AI-driven engagement

Wide-scale AI features and deep engagement from large user base strengthen retention and monetization potential. AI-driven personalization supports ARPU gains and stickiness across premium and ad tiers, creating a durable product differentiation that compounds with scale.

Negative Factors

Weak advertising growth

Sluggish ad growth constrains revenue diversification and leaves the firm exposed to premium pricing and subscription sensitivity. Structural ad recovery may be slow and podcast optimization trade-offs suggest monetization of the ad channel requires sustained execution to support long-term topline.

Inconsistent top-line growth

Revenue volatility undermines the durability of recent margin gains; sustaining margin expansion depends on consistent revenue growth. If premium ARPU, marketplace, or ad recovery underperform, margins could compress and cash generation gains may be harder to maintain over multiple quarters.

AI-related content moderation risk

AI-driven content proliferation raises moderation costs, royalty leakage, and brand/UX risk. Persistent low-quality uploads can reduce engagement and ad effectiveness, forcing higher content governance spend and potential regulatory scrutiny, pressuring margins and long-run product trust.

Spotify Business Overview & Revenue Model

Company Description

Spotify Technology S.A., together with its subsidiaries, provides audio streaming services worldwide. It operates through Premium and Ad-Supported segments. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers. The Ad-Supported segment provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its subscribers on their computers, tablets, and compatible mobile devices. The company also offers sales, marketing, contract research and development, and customer support services. As of December 31, 2021, its platform included 406 million monthly active users and 180 million premium subscribers in 184 countries and territories. The company was incorporated in 2006 and is based in Luxembourg, Luxembourg.

How the Company Makes Money

Spotify generates revenue primarily through two key streams: premium subscriptions and advertising. The premium subscription model allows users to pay a monthly fee for an ad-free experience, offline listening, and enhanced audio quality. This tier has become a significant source of revenue, as millions of users are attracted to the benefits of a paid subscription. Additionally, Spotify offers a free tier supported by advertisements, where users can listen to music with certain limitations and interruptions from ads. Advertising revenue comes from brands that pay to promote their products or services to Spotify's vast user base. Furthermore, Spotify has engaged in strategic partnerships with various companies and artists to enhance its offerings and reach, contributing to its overall earnings.

Spotify Financial Statement Overview

Summary

Financial results show a strong turnaround with expanding profitability and margins (net margin ~12.9% in 2025, operating margin ~14.5%, gross margin ~32%) and robust free cash flow generation (~$2.78B in 2025). Balance sheet leverage appears manageable (debt-to-equity ~0.28) with stronger equity, but the 2025 revenue decline and a slight dip in free cash flow growth add durability risk to the step-up in performance.

Income Statement

Spotify shows a clear profitability inflection: after losses in 2022–2023, 2024 turned profitable and 2025 expanded meaningfully, with net margin rising to ~12.9% (from ~7.3% in 2024) and operating margin improving to ~14.5% (from ~8.8%). Gross margin also strengthened to ~32.0% in 2025 (vs. ~30.1% in 2024). The main weakness is growth consistency—revenue declined in 2025 (~-2.3%) after solid growth in 2024 (~18.3%), suggesting top-line momentum is not yet stable.

Balance Sheet

The balance sheet appears stronger and less leveraged over time, with debt-to-equity improving to ~0.28 in 2025 from ~0.67 in 2023 (and ~0.36 in 2024). Equity has grown materially (to ~$8.3B in 2025 from ~$2.5B in 2023), supporting financial flexibility. Return on equity is strong in 2024–2025 (~20.6% to ~25.5%), reflecting improved profitability, though this comes after several years of negative returns, highlighting that the turnaround is relatively recent.

Cash Flow

Cash generation is a major positive: operating cash flow and free cash flow increased substantially versus earlier years, reaching ~$2.84B and ~$2.78B in 2025, respectively (vs. ~$0.68B/~$0.67B in 2023). Free cash flow tracks earnings closely (free cash flow to net income ~0.98–0.99 in 2024–2025), suggesting earnings quality is solid. Offsetting this, free cash flow dipped in 2025 (growth ~-5.2%) after improving in 2024, and the company’s operating cash flow relative to revenue remains moderate (~0.47–0.52 in 2024–2025), indicating cash conversion is good but not best-in-class.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	16.51B	15.67B	13.25B	11.73B	9.67B
Gross Profit	5.28B	4.72B	3.40B	2.93B	2.59B
EBITDA	2.49B	1.50B	-309.00M	-158.00M	416.00M
Net Income	2.12B	1.14B	-532.00M	-430.00M	-34.00M
Balance Sheet
Total Assets	15.01B	12.00B	8.38B	7.57B	7.19B
Cash, Cash Equivalents and Short-Term Investments	9.46B	7.45B	4.23B	3.32B	3.51B
Total Debt	2.32B	2.00B	1.70B	1.67B	1.79B
Total Liabilities	6.68B	6.48B	5.85B	5.19B	5.07B
Stockholders Equity	8.33B	5.52B	2.53B	2.38B	2.13B
Cash Flow
Free Cash Flow	2.78B	2.28B	674.00M	21.00M	276.00M
Operating Cash Flow	2.84B	2.30B	680.00M	46.00M	361.00M
Investing Cash Flow	-1.74B	-1.49B	-217.00M	-423.00M	-187.00M
Financing Cash Flow	-365.96M	729.00M	234.00M	-40.00M	1.25B

Spotify Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 490.60
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPOT, the sentiment is Neutral. The current price of 490.6 is above the 20-day moving average (MA) of 475.37, below the 50-day MA of 527.20, and below the 200-day MA of 639.00, indicating a neutral trend. The MACD of -15.03 indicates Negative momentum. The RSI at 50.38 is Neutral, neither overbought nor oversold. The STOCH value of 79.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SPOT.

Spotify Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AAPL	74 Outperform	$3.88T	33.45	152.02%	0.38%	―	―
TME	71 Outperform	$22.30B	15.66	14.47%	1.02%	13.86%	80.97%
NFLX	69 Neutral	$329.29B	30.47	42.76%	―	15.49%	35.54%
PINS	66 Neutral	$10.89B	27.46	8.78%	―	16.79%	819.94%
SPOT	65 Neutral	$98.30B	39.06	32.98%	―	14.10%	102.32%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
WMG	59 Neutral	$15.28B	50.56	47.75%	2.47%	4.37%	-16.22%

Spotify Corporate Events

Spotify Delivers Record Users, Margin Gains and €2.9 Billion Free Cash Flow in 2025

Spotify reported strong fourth-quarter and full-year 2025 results on February 10, 2026, with all key performance indicators meeting or exceeding guidance and record user growth. Monthly active users rose 11% year-on-year to 751 million, including 290 million premium subscribers, while revenue grew 7% to €4.53 billion (13% in constant currency), driven by premium subscription gains and improving ad-supported performance.

Profitability improved markedly, with gross margin reaching a record 33.1% and operating income climbing 47% year-on-year to €701 million, aided in part by lower-than-forecast social charges tied to share price movements. Free cash flow totaled €834 million in the quarter and €2.9 billion for 2025, reinforcing a cash-rich balance sheet of €9.5 billion as Spotify invests in features like Wrapped, music videos, audiobooks, and AI-powered personalization, underscoring its strengthened competitive position heading into 2026.

The most recent analyst rating on (SPOT) stock is a Buy with a $720.00 price target. To see the full list of analyst forecasts on Spotify stock, see the SPOT Stock Forecast page.

Spotify Elects New Board Members at Extraordinary Meeting

On December 10, 2025, Spotify Technology S.A. conducted an extraordinary general meeting where shareholders elected new members to the Board of Directors. Alex Norström and Gustav Söderström were elected as directors, with their terms starting on January 1, 2026. This election is significant as it may influence Spotify’s strategic direction and governance, impacting stakeholders and potentially affecting the company’s market position.

The most recent analyst rating on (SPOT) stock is a Buy with a $800.00 price target. To see the full list of analyst forecasts on Spotify stock, see the SPOT Stock Forecast page.