Spotify Technology (SPOT) stock is up about 10% this morning (trading at about $579) after the company guided to €820 million in fourth-quarter operating income, above the €813.36 million LSEG estimate cited by Reuters. Third-quarter revenue of €4.97 billion missed the €4.98 billion estimate by a hair.
Both gaps are tiny. The profit beat is €6.6 million, under 1% of the estimate, and the revenue miss is about €11 million. Yet a 10% move adds roughly $11 billion to a company worth about $108 billion at Wednesday’s close. The part of the report that changes the picture is the guide’s signal that Spotify’s spending growth is slowing.
Spotify’s Spending Bill Starts to Shrink
Spotify framed this year’s heavier spending as temporary, with marketing and AI computing costs concentrated in the second and third quarters. The third-quarter shareholder deck shows the bill: operating expenses rose 26% to €967 million, or 19% excluding currency and share-price-linked payroll taxes.
The fourth-quarter guide implies that pace slows. Spotify expects a 33.8% gross margin on €5.2 billion of revenue, which leaves about €938 million of operating expenses after the €820 million profit target. That’s up about 17.5% from a year earlier (helped by an assumption of just €6 million in those payroll taxes, against €22 million in the third quarter).
What Spotify’s Margin Chart Says About the Guide
Spotify’s EBIT margin climbed to 15.77% in the first quarter of 2026, then fell to 13.71% in the second as spending stepped up. The third quarter came in at 13.5%.
The guide puts the fourth-quarter margin at about 15.8%, back near the first-quarter high. Last year’s comparison needs one adjustment, though: share-price-linked payroll taxes went from a €16 million credit in the third quarter of 2025 to a €50 million credit in the fourth. Excluding those items, the margin rose from about 13.25% to 14.37%, an increase of 1.1 points. This year’s guide implies an increase from about 13.97% to 15.88%, or 1.9 points. On that basis, the fourth-quarter 2026 guide sits about 1.5 points above the fourth quarter of 2025.
TIKR Tracks 40 Analysts on Spotify. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Spotify, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Spotify’s Analyst Ratings
How Much of Spotify’s Recovery Is Priced In
The top line gives bears something to hold. The €5.2 billion revenue guide sits below the €5.23 billion estimate, and after the roughly 2.3-point currency tailwind Spotify expects, constant-currency growth slows to about 12.5% from 14% in the third quarter (a rough figure, since the guide is rounded).
Spotify stock trades at about 35x next-12-month earnings, below its five-year average of about 52x (an average distorted by the loss-making years).
Full-year 2026 operating income on the guide comes to about €2.86 billion, up 30% from 2025, so the growth is real. Still, paying 35x earnings asks Spotify to sustain its margin improvement into 2027. The underlying margin gain in the guide makes today’s rally a reasonable bet that spending has peaked, but one quarter of it doesn’t yet justify a bigger multiple.
The Margin Line Spotify Holders Should Circle
The answer comes with the fourth-quarter report early next year, when Spotify guides the first quarter of 2027. The first quarter of 2026 ran at a 15.77% EBIT margin, but a €39 million payroll-tax credit did part of the work; without it, the margin was about 14.9%. A first-quarter 2027 guide above that line, excluding social charges, would support sustained margin expansion. One at or below it would mean the fourth-quarter improvement didn’t carry into 2027.
So what is Spotify stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what SPOT stock could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Value Spotify Technology S.A. for free→
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
