Spotify (SPOT) Stock Forecast & Price Target

Spotify Technology has demonstrated robust growth in its user base, with premium subscribers increasing by 5 million to reach 281 million, while monthly active users surged by 17 million to total 713 million, surpassing guidance expectations. The firm achieved a gross margin of 31.6%, exceeding guidance by 50 basis points, and reported a 28% year-over-year rise in operating profit to €582 million, exceeding guidance by nearly €100 million. Furthermore, ad sales are projected to accelerate in the second half of 2026, indicating potential for continued revenue and profitability growth.

Spotify Technology, despite having a substantial user base of over 700 million active users and 280 million paying subscribers, has displayed concerning trends that contribute to a negative outlook on its stock. In the fourth quarter of 2025, the company's guidance indicated a shortfall in expected ad revenues, with advertising growth declining to flat year-over-year in the third quarter, compared to prior growth of 4.6%, and a substantial dip of 5.5% in reported advertising revenues. Additionally, rising content costs, potential margin compression, and challenges in generating new subscriptions amidst increased competition and stagnant price growth introduce significant risks that may adversely affect Spotify's financial performance.