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Spotify's Profit Leap: Wall Street Strong Buy
28 Apr
Summary
- Spotify revenue increased 13% to $5.39 billion in Q4.
- Monthly active users grew 11% to 751 million globally.
- Wall Street gives Spotify a 'Strong Buy' rating with a price target.
Spotify achieved a notable financial turnaround in its fourth quarter, reporting revenue of $5.39 billion, a 13% increase year-over-year on a constant-currency basis. The audio streaming giant also posted a record quarterly operating income of $816 million, signaling a sustained path to profitability through effective price management and subscriber retention.
This period saw the company reach 751 million monthly active users, an 11% year-over-year growth, with Premium Subscribers totaling 290 million. Spotify's gross margin hit a record 33.1%, surpassing expectations due to reduced social charges and enhanced podcasting efficiencies.
Looking ahead to the first quarter of 2026, Spotify has guided for 759 million monthly active users and expects approximately 8 million net new subscribers. The company is focused on long-term free cash flow generation, aiming for 1 billion users by 2030 and has a cash reserve exceeding $9.5 billion to fund initiatives like audiobook expansion.
Wall Street sentiment is overwhelmingly positive, with a consensus 'Strong Buy' rating for Spotify stock (SPOT). Analysts project a substantial 229% year-over-year earnings growth for the current quarter and a 32.30% increase for the full fiscal year 2026. The mean price target stands at $660.68, indicating a 27.5% potential upside from current trading levels.
