Spotify (SPOT) Stock Forecast & Price Target

Spotify Technology demonstrated robust growth in its user base, with premium subscribers increasing by 5 million to a total of 281 million, which aligns with guidance, while monthly active users surged by 17 million to reach 713 million, exceeding expectations. The company reported a gross margin of 31.6%, which surpassed guidance by 50 basis points, and achieved an operating profit of €582 million, reflecting a 28% year-over-year growth and an outperformance of nearly €100 million against guidance. Furthermore, advertising sales are projected to accelerate in the second half of 2026, supporting a positive outlook for the firm's financial performance.

Spotify Technology faces several challenges that contribute to a negative outlook. The firm reported lower-than-expected guidance for 4Q25, particularly in advertising revenues, with a noticeable decline in ad growth dropping from +4.6% Y/Y in 2Q25 to flat in 3Q25, ultimately resulting in a reported 5.5% dip in advertising revenue. Additionally, risks such as rising content costs, ineffective R&D investments, and increasing competition may further impact profitability and margins, which could fall short of prior forecasts.