Spotify (SPOT) AI Stock Analysis

• Market Cap: $129.94B
• Dividend Yield: N/A
• Average Volume (3M): 1.67M
• Price to Earnings (P/E): 82.6
• 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): 3.78
• Shares Outstanding: 205,894,010
• 10 Day Avg. Volume: 1,919,050
• 30 Day Avg. Volume: 1,674,951
• PEG Ratio: -0.25
• Price to Book (P/B): 15.69
• Price to Sales (P/S): 5.53
• P/FCF Ratio: 37.95
• Enterprise Value/Market Cap: 1.09
• Enterprise Value/Revenue: 8.29
• Enterprise Value/Gross Profit: 26.16
• Enterprise Value/Ebitda: 70.89
• 1Y Price Target: $780.56
• Price Target Upside: 26.20% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 26
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 66 Neutral
• Price Target: $666.00 ▲(7.67% Upside)

Spotify's overall stock score is driven by strong financial performance and positive earnings call highlights, including robust user growth and product innovation. However, technical analysis indicates bearish momentum, and the high P/E ratio suggests potential overvaluation. Challenges in the advertising sector and managing churn from price increases are notable risks.

Positive Factors

User Growth

Strong user growth indicates Spotify's increasing market reach and user engagement, vital for long-term revenue expansion and competitive positioning.

Product Innovation

Continuous product innovation, such as new features and integrations, strengthens Spotify's market differentiation and user retention, supporting sustainable growth.

Financial Performance

Consistent revenue growth and improved financial metrics enhance Spotify's ability to invest in strategic initiatives and maintain a strong competitive position.

Negative Factors

Advertising Challenges

Slower growth in advertising highlights execution challenges, potentially impacting revenue diversification and overall financial performance.

Pricing and Churn

Price increases leading to churn can affect subscriber growth and retention, posing risks to revenue stability and market share.

Leadership Transition

Leadership changes may introduce strategic uncertainty, affecting long-term vision execution and potentially impacting stakeholder confidence.

Spotify Business Overview & Revenue Model

Company Description

Spotify Technology S.A. is a leading audio streaming service based in Luxembourg, offering a vast library of music, podcasts, and other audio content. Founded in 2006, Spotify provides both free and premium subscription services, allowing users to stream music and podcasts from a catalog that includes millions of tracks and shows. The company operates primarily in the digital music and podcast sectors, focusing on enhancing user experience through personalized playlists, discovery features, and exclusive content.

How the Company Makes Money

Spotify generates revenue through two primary streams: Premium subscriptions and advertising. The Premium subscription service offers users an ad-free experience with additional features such as offline listening and higher audio quality. This subscription model accounts for a significant portion of Spotify's revenue. Additionally, the company provides a free tier supported by advertising, where users can listen to music with commercial interruptions. Spotify partners with various brands for ad placements within its free service, which also contributes to its earnings. Furthermore, Spotify has entered into exclusive content agreements and partnerships with podcast creators and networks, enhancing its content offerings and attracting more users, thereby increasing its potential ad revenue.

Spotify Financial Statement Overview

Summary

Spotify demonstrates strong financial performance with consistent revenue growth and effective cash flow management. While profitability margins have faced some pressure, the company maintains a stable balance sheet with manageable leverage. The positive cash flow metrics underscore Spotify's financial health and ability to invest in future growth.

Income Statement

Spotify's income statement shows a positive trajectory with consistent revenue growth, highlighted by a TTM revenue growth rate of 1.70%. The gross profit margin has improved to 31.63% in the TTM period, indicating better cost management. However, the net profit margin has decreased to 4.85% from 7.26% in the previous year, suggesting increased expenses or other financial pressures. The EBIT and EBITDA margins have also slightly decreased, reflecting some operational challenges.

Balance Sheet

The balance sheet reflects a stable financial position with a manageable debt-to-equity ratio of 0.36 in the TTM period, showing effective leverage management. The return on equity has decreased to 14.00% from 20.60% in the previous year, indicating reduced profitability relative to shareholder equity. The equity ratio remains strong, suggesting a solid capital structure.

Cash Flow

Spotify's cash flow statement is robust, with a significant free cash flow growth rate of 3.99% in the TTM period. The operating cash flow to net income ratio of 0.45 indicates strong cash generation relative to net income, and the free cash flow to net income ratio of 0.99 suggests efficient cash management. These metrics highlight Spotify's ability to generate cash and maintain liquidity.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	17.02B	15.67B	13.25B	11.73B	9.67B	7.88B
Gross Profit	5.40B	4.72B	3.40B	2.93B	2.59B	2.02B
EBITDA	1.99B	1.50B	-309.00M	-158.00M	416.00M	-544.00M
Net Income	1.42B	1.14B	-532.00M	-430.00M	-34.00M	-581.00M
Balance Sheet
Total Assets	14.69B	12.00B	8.38B	7.57B	7.19B	6.32B
Cash, Cash Equivalents and Short-Term Investments	9.09B	7.45B	4.23B	3.32B	3.51B	1.74B
Total Debt	2.25B	2.00B	1.70B	1.67B	1.79B	576.28M
Total Liabilities	6.91B	6.48B	5.85B	5.19B	5.07B	3.52B
Stockholders Equity	7.78B	5.52B	2.53B	2.38B	2.13B	2.80B
Cash Flow
Free Cash Flow	2.93B	2.28B	674.00M	21.00M	276.00M	181.00M
Operating Cash Flow	2.98B	2.30B	680.00M	46.00M	361.00M	259.00M
Investing Cash Flow	-2.36B	-1.49B	-217.00M	-423.00M	-187.00M	-372.00M
Financing Cash Flow	281.00M	729.00M	234.00M	-40.00M	1.25B	285.00M

Spotify Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 618.53
• 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 Negative. The current price of 618.53 is below the 20-day moving average (MA) of 641.22, below the 50-day MA of 674.45, and below the 200-day MA of 653.88, indicating a bearish trend. The MACD of -11.99 indicates Negative momentum. The RSI at 36.43 is Neutral, neither overbought nor oversold. The STOCH value of 41.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SPOT.

Spotify Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PINS	73 Outperform	$17.24B	8.93	51.49%	―	16.79%	819.94%
TME	71 Outperform	$26.86B	19.35	14.47%	0.96%	13.86%	80.97%
NFLX	69 Neutral	$467.33B	47.66	42.86%	―	15.49%	35.54%
SPOT	66 Neutral	$129.94B	82.61	22.10%	―	14.10%	102.32%
DASH	65 Neutral	$90.79B	107.59	10.11%	―	24.46%	―
WMG	63 Neutral	$15.87B	53.86	54.66%	2.47%	1.36%	-45.79%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%

Spotify Corporate Events

Spotify Announces Extraordinary General Meeting for Board Elections

Spotify Technology S.A. announced an Extraordinary General Meeting scheduled for December 10, 2025, in Luxembourg, where shareholders and holders of beneficiary certificates will vote on the election of two new board members, Alex Norström and Gustav Söderström, effective January 1, 2026. This meeting reflects Spotify’s ongoing efforts to strengthen its governance structure, potentially impacting its strategic direction and stakeholder engagement.

Spotify Reports Strong Q3 2025 Financial Results

Spotify Technology S.A. released its interim condensed consolidated financial statements for the three and nine months ended September 30, 2025. The company reported a revenue increase to €4,272 million for the third quarter of 2025, up from €3,988 million in the same period of 2024. This growth was accompanied by a rise in operating income to €582 million, reflecting Spotify’s strengthened financial performance. The financial results indicate a positive trajectory for Spotify, enhancing its position in the competitive music streaming market and potentially benefiting its stakeholders.

Spotify Reports Strong Q3 2025 Results with Revenue and Subscriber Growth

On November 4, 2025, Spotify Technology S.A. announced its financial results for Q3 2025, highlighting a strong performance with all key performance indicators meeting or exceeding expectations. The company reported a 7% year-over-year increase in total revenue to €4.3 billion, with premium subscriber growth of 12% and monthly active users reaching 713 million. Spotify’s operating income rose to €582 million, driven by lower social charges and favorable marketing and personnel costs. The company also launched 30 product updates, including integration with ChatGPT, enhancing its AI capabilities. These results position Spotify well for continued growth and improved margins as it reinvests for long-term potential.

Spotify Announces Leadership Transition Effective January 2026

On September 30, 2025, Spotify announced a leadership transition effective January 1, 2026, with Daniel Ek stepping down as CEO to become Executive Chairman. Alex Norström and Gustav Söderström will be promoted to co-CEOs, continuing their strategic roles since 2023. This shift aligns with Spotify’s operational structure and aims to maintain its industry leadership and innovation.