Spotify (SPOT) Stock Forecast & Price Target

Spotify Technology continues to demonstrate robust financial performance, evidenced by a significant increase in monthly active users, which rose by 17 million to reach 713 million, surpassing guidance expectations. The premium subscription segment, which is crucial for revenue generation, also showed growth, with subscribers increasing by 5 million to a total of 281 million, aligning with the company's projections. Additionally, Spotify reported a gross margin of 31.6%, exceeding its guidance by 50 basis points, and an operating profit of €582 million, reflecting a 28% year-over-year increase and exceeding forecasts by nearly €100 million.

Spotify Technology's forecast for 4Q25 reflects a disappointing outlook, primarily due to lower-than-expected ad revenues, with the advertising growth flatlining at 0% year-over-year in 3Q25, compared to a previous increase of 4.6% in 2Q25. Additionally, a reported decline of 5.5% in advertising revenue and disappointing performance in direct sales indicate underlying weaknesses in Spotify's business model. The company's margins are also anticipated to fall short of expectations, compounded by various risks such as rising content costs, competition, and potential legal challenges, which could negatively impact both revenue growth and profitability.