As the streaming landscape continues to evolve, Spotify Technology SA (SPOT), long known for its audio offerings, is boldly repositioning itself as a full-fledged multimedia platform. After years of dominance in music and podcasts, the company is now making a big bet on music videos and creator-driven video content, aiming to challenge giants like YouTube and TikTok. The measure is expected by the end of this month.
Meanwhile, Spotify has reportedly closed licensing deals with major record labels for audiovisual content, expanded its video catalog to music tracks and podcasts, and offers new advertising formats and monetization tools for creators and advertisers alike.
Additionally, Spotify is deepening its video footprint through partnerships, notably an October deal with Netflix (NFLX) to bring select video podcasts to the Netflix platform starting in the US in early 2026, followed by international markets.
Given that its stock price has taken a breather recently, partly reflecting investor uncertainty, is the video enough of a turnaround to justify renewed optimism?
Spotify is a leading global audio streaming and media company, delivering music and podcasts to users around the world. Headquartered in Luxembourg, it has a market capitalization of around $116.3 billion, reflecting its status as one of the major players in the global streaming industry. Over the years, Spotify has expanded its services beyond music, adding podcasts, audiobooks, and is now doubling down on video and audiovisual content.
The performance of Spotify’s share price in 2025 has been spectacular, characterized by strong increases and significant swings. SPOT soared earlier this year amid renewed optimism about user growth, profitability and expansion beyond music. The stock hit a 52-week high of $785 on June 27, a reflection of bullish sentiment and high expectations. However, since that peak, shares have pulled back, closing the latest session at $564.93, putting SPOT about 28% below that peak.
However, year-to-date (YTD), the stock has returned 26.98%, while over the past 52 weeks it is up 13.93%.
Meanwhile, the second half of 2025 is testing patience. Caution remains over the speed at which Spotify can turn its expanding user base into consistent and sustainable profits, especially amid evolving competitive and macroeconomic pressures. The stock is down 20.91% in the last three months.
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The stock trades at a premium to its industry peers at 72.70 times forward earnings.
Spotify released its third quarter 2025 earnings on November 4. The results painted a solid picture: the company reported that Monthly Active Users (MAU) reached 713 million, an 11% year-over-year increase. Meanwhile, its premium subscriber base rose to 281 million, a 12% increase from a year earlier.
Spotify’s total revenue increased by approximately 12% year-on-year, generating around €4.3 billion ($5 billion). Gross margin improved to 31.6%, beating guidance by about 50 basis points.
Furthermore, notably, operating income soared to €582 million ($677.9 million), well above guidance, while free cash flow also hit a quarterly record of €806 million ($938.9 million), underscoring a strong balance sheet and healthy liquidity.
In terms of profitability, Spotify turned from the previous quarter’s losses to post a net profit of 899 million euros ($1.1 billion), or 3.28 euros per share, well above analysts’ expectations.
In the quarter, Spotify released about 30 product updates, including “lossless” audio, improved tools for mixing playlists, expanded mobile-free tiering capabilities, messaging between users, and improved discovery controls. The company is clearly leaning toward a multi-format vision and laying the groundwork for broader content and monetization strategies.
Additionally, Spotify, for the next quarter (Q4 2025), expects MAUs to increase to 745 million and premium subscribers to grow to 289 million (implying around 8 million net additions). The revenue forecast for the fourth quarter stands at €4.5 billion, with a target gross margin of around 32.9%.
Analysts predict EPS will hover around $7.72 by fiscal 2025, up 29.8% year-over-year, before rising a solid 83.9% year-over-year to $14.20 in fiscal 2026.
Erste Group recently lowered its rating on Spotify from “Buy” to “Hold,” warning that revenue growth is likely to slow in 2026. The firm noted that Spotify has delivered strong revenue growth and modestly reduced operating costs, which has helped improve margins, but analyst Hans Engel noted that weakening U.S. consumer confidence is a potential drag on next year’s performance.
Elsewhere, Deutsche Bank reaffirmed its “Buy” rating on Spotify and maintained a $775 price target, highlighting significant growth driven by subscription price increases.
Additionally, last month, Bernstein SocGen reaffirmed its “outperform” rating on Spotify with a price target of $830. The company is optimistic about Spotify’s latest strategic move: the launch of its Premium Platinum tier in five Asia-Pacific markets, a high-priced plan that offers HiFi audio, AI DJ and other premium features. Bernstein sees this as the beginning of a “superfan era,” which will unlock new pricing power for the platform.
In addition to the Platinum launch, Spotify significantly increased prices for the Standard tier in these regions and introduced a Lite tier to retain budget users. Bernstein believes this expanded tier structure gives Spotify a valuable new revenue lever heading into 2026.
Overall, SPOT has a consensus rating of “Moderate Buy.” Of the 35 analysts covering the stock, 21 recommend a “strong buy,” three suggest a “moderate buy,” and the remaining 11 analysts stay away, giving it a “hold” rating.
The average analyst price target for SPOT is $764.06, indicating a potential upside of 33.5%. The Street’s high price target of $900 suggests the stock could rise as much as 57%.
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On the date of publication, Subhasree Kar had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
