Key Takeaways:
- Spotify is being priced on stronger margins and cash flow, not just user growth, after 2025 revenue rose to €17.2 billion and operating income reached €2.2 billion.
- The market is also weighing a slower revenue growth rate, a recent share buyback authorization, and new advertising tools as it waits for first-quarter 2026 results on April 28.
- Spotify stock could reasonably reach around $657 per share by late 2028, based on the valuation model.
- That implies a roughly 26% total return from the current price of $522, or about 9% annualized over the next 2.7 years.
What Happened?
Spotify Technology S.A. (SPOT) is in focus because investors are waiting for another proof point in the company’s turnaround. Spotify said on March 26 that it would announce first-quarter 2026 results on April 28, and that date now matters because the stock is coming off a volatile stretch after a huge 2025 rally. The market wants to see whether Spotify can keep expanding margins while still growing subscribers and advertising revenue.
The recent news flow has supported that broader story. At its April 15 annual meeting, shareholders approved authorization for the company to repurchase up to 10 million ordinary shares over five years, renewing a capital return tool that management can use while the business throws off more cash.
That approval came after Spotify generated €2.9 billion of free cash flow in 2025, which gives the buyback decision more weight than it would have had during the company’s loss-making years.
Spotify has also been trying to deepen monetization beyond music subscriptions alone. On March 31, the company launched new ad formats, campaign optimization tools, and fresh research for advertisers, and Reuters also reported in early April that Spotify expanded video control features for all Family Plan accounts.
Leadership changes are part of the picture, too. Spotify disclosed on March 25 that Chief Accounting Officer Paul Sawyer plans to retire effective May 26, with NBCUniversal executive John Giraldo set to succeed him.
Here’s why Spotify stock could keep moving from here: the company now has to show that better profitability, buybacks, and product expansion are durable enough to support a premium multiple even as revenue growth cools.
What the Model Says for SPOT Stock
We analyzed the upside potential for Spotify stock using valuation assumptions tied to steady revenue growth, higher operating margins, and a more normalized earnings multiple.
Based on estimates of around 10% annual revenue growth, around 16% operating margins, and a normalized P/E multiple of around 35x, the model projects Spotify stock could rise from $522 to $657 per share.
That would be a 25.7% total return, or an 8.8% annualized return over the next 2.7 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for SPOT stock:
1. Revenue Growth: 10%
Spotify’s growth is still solid, but it has clearly matured from its earlier years. Revenue increased from €13.2 billion in 2023 to €15.7 billion in 2024 and then to €17.2 billion in 2025. That means the business is still expanding, but the pace is slower than when Spotify was earlier in its global land-grab phase.
The underlying user engine is still healthy. Spotify ended 2025 with 751 million monthly active users and 290 million premium subscribers, and Reuters said record fourth-quarter MAU net adds of 38 million were helped by Wrapped and broader engagement.
Based on analysts’ consensus estimates, we use around 10% annual revenue growth. That lines up with the guided valuation assumption and roughly matches Spotify’s more recent top-line trend, while leaving room for advertising tools, audiobooks, and pricing to help offset a slower overall growth profile.
2. Operating Margins: 16%
Margins are the biggest part of the Spotify story now. The company moved from negative operating margins in 2022 and 2023 to 8.8% in 2024 and 12.8% in 2025, while the fourth-quarter 2025 operating margin reached 15.5%. That improvement is why investors have been willing to look past slower revenue growth.
Spotify’s recent profitability gains have come from several places. Reuters said price hikes and cost cuts helped power fourth-quarter profits, while the shareholder deck showed operating expenses down 10% year over year in Q4 and gross margin at a record 33.1%. So the margin improvement is not coming from one unusual quarter alone.
Based on analysts’ consensus estimates, we use around 16% operating margins. That is close to the guided valuation assumption and implies more progress from current levels, but not an unrealistic leap. It assumes Spotify keeps turning scale, pricing, and ad/product mix into better profitability over time.
3. Exit P/E Multiple: 35x
The exit multiple is where the model stays disciplined. Spotify’s current market data shows the stock at about 42x LTM earnings, while the valuation model uses a normalized P/E closer to 35x. In other words, the model assumes some moderation in valuation even if the business continues to execute well.
There is a good reason for that. Reuters reported that fourth-quarter 2025 revenue growth was Spotify’s slowest since it went public, even though profitability and user growth were strong. When a stock already reflects a big turnaround, investors usually need ongoing margin gains and clean execution to justify keeping a very rich multiple.
Based on analysts’ consensus estimates, we use an exit P/E multiple of around 35x. That still gives Spotify credit for its platform strength, better cash generation, and large net cash position. But it avoids assuming the market will keep expanding the multiple after such a sharp multi-year rerating.
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What Happens If Things Go Better or Worse?
Different scenarios for Spotify stock through 2035 show varied outcomes based on subscriber growth, advertising monetization, margin execution, and valuation discipline (these are estimates, not guaranteed returns):
- Low Case: Revenue growth slows further, ad monetization stays softer, and valuation compresses faster → 7.1% annual returns
- Mid Case: Spotify keeps growing subscribers, expands margins, and compounds free cash flow steadily → 10.3% annual returns
- High Case: Premium, ads, and newer products like video and audiobooks all scale efficiently → 13.3% annual returns
Going forward, Spotify will likely move with each update on subscriber trends, ad monetization, margin progression, and the April 28 earnings report.
See what analysts think about SPOT stock right now (Free with TIKR) >>>
Should You Invest in Spotify Technology S.A.?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up SPOT, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track SPOT alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Analyze Spotify stock on TIKR Free→
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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 stocks mentioned. Thank you for reading, and happy investing!
