Spotify (SPOT) AI Stock Analysis

• Market Cap: $132.46B
• Dividend Yield: N/A
• Average Volume (3M): 1.51M
• Price to Earnings (P/E): 154.2
• Beta (1Y): 0.89
• Revenue Growth: 15.52%
• EPS Growth: 67.15%
• Country: US
• Employees: 7,258
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): -0.49
• Shares Outstanding: 205,777,760
• 10 Day Avg. Volume: 1,485,356
• 30 Day Avg. Volume: 1,512,444
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 9.07
• Enterprise Value/Gross Profit: 28.67
• Enterprise Value/Ebitda: 106.08
• 1Y Price Target: $793.22
• Price Target Upside: 19.16% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 23

• Rating: 69 Neutral
• Price Target: $740.00 ▲(11.17% Upside)

Spotify's overall stock score reflects strong financial performance and significant user growth, which are tempered by high valuation concerns and mixed technical indicators. The earnings call provided positive insights into strategic growth areas, but challenges in the advertising sector and currency impacts remain.

Positive Factors

Strong User and Subscriber Growth

Significant growth in subscribers indicates strong market demand and enhances Spotify's competitive position, supporting long-term revenue growth.

AI and Product Enhancement

Advancements in AI-driven features improve user engagement and personalization, strengthening Spotify's value proposition and user retention.

Strong Financial Position

Robust cash flow and liquidity provide financial flexibility for strategic investments and operational stability, supporting long-term growth.

Negative Factors

Underperformance in Advertising Business

Challenges in the advertising sector may limit revenue diversification and growth potential, impacting long-term profitability.

Operating Income Below Guidance

Lower-than-expected operating income suggests cost management issues, which could affect future profitability and financial performance.

Leadership Transition

Leadership changes may introduce strategic uncertainties and impact execution, potentially affecting Spotify's market position and innovation.

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's financial performance is strong, highlighted by a 5.97% revenue growth, improved profit margins, and robust cash flow. The balance sheet shows low leverage and high equity ratios, indicating financial stability.

Income Statement

Spotify's income statement shows robust growth with a revenue increase from $15.67 billion in 2024 to $16.61 billion in TTM (Trailing-Twelve-Months), marking a revenue growth rate of approximately 5.97%. The gross profit margin improved slightly to 31.62% in TTM, indicating efficient production. Net profit margin in TTM is at 4.85%, showing a positive turnaround from previous losses, which enhances profitability perception. EBIT margin improved significantly from 8.71% to 11.11% in TTM, reflecting better operational efficiency.

Balance Sheet

The balance sheet presents a strong financial position with a debt-to-equity ratio of 0.36, suggesting conservative leverage. The equity ratio stands at 49.22%, indicating a stable equity base. Return on equity (ROE) is at 12.16% for TTM, showing efficient utilization of equity to generate profits. The increase in stockholders' equity and total assets over time demonstrates a healthy financial trajectory.

Cash Flow

Spotify exhibits a strong cash flow position, with free cash flow growing by 23.47% from 2024 to TTM. Operating cash flow to net income ratio is 3.53, reflecting robust cash inflow relative to net earnings, enhancing liquidity. The free cash flow to net income ratio is exceptionally high at 3.50, indicating effective cash management and potential for reinvestment or debt reduction.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	16.61B	15.67B	13.25B	11.73B	9.67B	7.88B
Gross Profit	5.25B	4.72B	3.40B	2.93B	2.59B	2.02B
EBITDA	1.42B	1.50B	-309.00M	-158.00M	416.00M	-544.00M
Net Income	806.00M	1.14B	-532.00M	-430.00M	-34.00M	-581.00M
Balance Sheet
Total Assets	13.49B	12.00B	8.38B	7.57B	7.19B	6.32B
Cash, Cash Equivalents and Short-Term Investments	8.36B	7.45B	4.23B	3.32B	3.51B	1.74B
Total Debt	2.39B	2.00B	1.70B	1.67B	1.79B	576.28M
Total Liabilities	6.85B	6.48B	5.85B	5.19B	5.07B	3.52B
Stockholders Equity	6.64B	5.52B	2.53B	2.38B	2.13B	2.80B
Cash Flow
Free Cash Flow	2.82B	2.28B	674.00M	21.00M	276.00M	181.00M
Operating Cash Flow	2.85B	2.30B	680.00M	46.00M	361.00M	259.00M
Investing Cash Flow	-2.00B	-1.49B	-217.00M	-423.00M	-187.00M	-372.00M
Financing Cash Flow	480.00M	729.00M	234.00M	-40.00M	1.25B	285.00M

Spotify Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 665.67
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• 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 665.67 is below the 20-day moving average (MA) of 675.10, below the 50-day MA of 693.48, and above the 200-day MA of 645.13, indicating a neutral trend. The MACD of -10.44 indicates Positive momentum. The RSI at 44.54 is Neutral, neither overbought nor oversold. The STOCH value of 32.83 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
GOOG	―	$3.24T	28.59	34.83%	0.30%	13.19%	34.51%
GOOGL	―	$3.32T	28.49	34.83%	0.30%	13.19%	34.51%
PINS	―	$22.31B	11.73	48.08%	―	17.00%	901.05%
DASH	―	$113.66B	148.02	9.71%	―	23.78%	―
TME	―	$32.92B	24.91	14.07%	0.79%	10.66%	84.89%
SPOT	―	$132.46B	154.16	13.94%	―	15.52%	67.15%
Sector *	―	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%

Spotify Corporate Events

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.

Spotify Reports Q2 2025 Financial Results with Revenue Growth and Net Loss

Spotify Technology S.A. released its interim condensed consolidated financial statements for the three and six months ended June 30, 2025. The company reported a revenue increase to €4,193 million for the three months, up from €3,807 million in the same period in 2024, indicating a strong financial performance. However, the net loss attributable to owners of the parent was €86 million, compared to a net income of €274 million in the previous year, highlighting challenges in managing costs and financial expenses. This financial update reflects Spotify’s ongoing efforts to balance growth with profitability, impacting its operational strategies and stakeholder expectations.

Spotify Reports Strong Q2 2025 Results with Record Free Cash Flow

On July 29, 2025, Spotify Technology S.A. reported its Q2 2025 financial results, highlighting significant growth in monthly active users and premium subscribers, with a 15% year-over-year revenue increase on a constant currency basis. Despite facing challenges such as unfavorable currency movements and increased social charges, the company achieved a record high free cash flow of €700 million and maintained a strong liquidity position. Spotify’s strategic initiatives, including expanding audiobook offerings and launching new features like voice-activated DJ, are expected to support its long-term growth and margin improvement.