We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $4.9 million, indicating 20.3% year-over-year growth. The consensus estimate for total earnings is pinned at $2.19 per share, suggesting a 53.2% rally from the year-ago quarter’s actual. One estimate for the quarter has moved north in the past 60 days versus three southward revisions.
Image Source: Zacks Investment Research
Spotify Technology’s earnings surprise history is not impressive. In the four trailing quarters, it missed the Zacks Consensus Estimate in three of the four quarters and beat once, with an average negative surprise of 7.4%.
SPOT Showcases Lower Chances of Posting Q2 Earnings Beat
Our proven model does not conclusively predict an earnings beat for Spotify Technology this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
The consensus estimate for total monthly active users (MAU) is $736.8 million, suggesting an increase of 50.7% from the year-ago quarter’s actual. The Zacks Consensus Estimate for premium subscribers is pinned at $288.5 million, indicating 40.7% year-over-year growth. For ad-supported MAUs, the consensus mark is $465 million, suggesting a 57.6% rise from the year-ago quarter’s actual.
Spotify Technology’s Stock Skyrockets, Valuation High
SPOT shares have soared 100.4% in a year, outperforming the 50.8% rally of its industry and the 16.5% rise of the Zacks S&P 500 composite.
1-Year Price Performance
Image Source: Zacks Investment Research
SPOT is currently trading at a trailing 12-month price-to-earnings ratio of 58.82X, higher than the industry’s 40.45X.
Image Source: Zacks Investment Research
SPOT’s Investment Considerations
Spotify Technology’s growth story is driven by AI-led innovation, which has boosted its MAUs over recent quarters. There was a 16.9% increase in MAUs from the first to the fourth quarter of 2023. By the end of the fourth quarter of 2024, MAUs had grown 10% from the previous-year quarter. In the first quarter of 2025, 3 million MAUs were added. This trend highlights SPOT’s successful AI-enhanced developments from AI DJ to AI Playlist.
This optimistic growth in MAUs drove the top line 15% year over year in the first quarter of 2025. With the gross margin expanding by 400 basis points and operating expenses decreasing 3% year over year, SPOT demonstrated its strong operating leverage. Spotify Technology’s positive user growth outlook, combined with its ability to diversify geographically, positions it well to achieve its goal of reaching a billion users globally by 2030.
Meanwhile, fierce competition from Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) may hinder Spotify Technology’s growth capacity. Apple Music and Amazon Music proactively tend to capture the U.S. paid audience, thus reducing SPOT’s share in the market pie. Although Spotify Technology’s recommendation algorithms are superior, Apple Music’s lossless and spatial audio and Amazon Music’s Prime Subscription positions them well in the audio streaming domain.
Final Verdict
Spotify Technology’s historic growth path, fueled by its AI-driven innovations, and its strong revenues and profit outlook tend to attract investor attention. However, the combination of a negative Earnings ESP and the company’s Zacks Rank suggests that its earnings may fall short of expectations. Declining EPS estimates indicate a lack of analyst confidence and raise red flags.
The stock has performed impressively over the past year. However, its high valuation may make it a risky choice for investors. Although the company’s user growth prospects seem promising, the highly competitive nature of the audio streaming industry may hinder this growth. Hence, we recommend existing investors hold the stock for now. New buyers are urged to wait till the earnings release or a pullback that may mitigate downside risks.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Spotify Set to Report Q2 Earnings: Buy, Sell or Hold the Stock?
Key Takeaways
Spotify Technology S.A. (SPOT - Free Report) will report second-quarter 2025 results on July 29, before market open.
The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $4.9 million, indicating 20.3% year-over-year growth. The consensus estimate for total earnings is pinned at $2.19 per share, suggesting a 53.2% rally from the year-ago quarter’s actual. One estimate for the quarter has moved north in the past 60 days versus three southward revisions.
Spotify Technology’s earnings surprise history is not impressive. In the four trailing quarters, it missed the Zacks Consensus Estimate in three of the four quarters and beat once, with an average negative surprise of 7.4%.
SPOT Showcases Lower Chances of Posting Q2 Earnings Beat
Our proven model does not conclusively predict an earnings beat for Spotify Technology this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
SPOT has an Earnings ESP of -9.14% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
User Growth to Have Been SPOT’s Driver in Q2
The consensus estimate for total monthly active users (MAU) is $736.8 million, suggesting an increase of 50.7% from the year-ago quarter’s actual. The Zacks Consensus Estimate for premium subscribers is pinned at $288.5 million, indicating 40.7% year-over-year growth. For ad-supported MAUs, the consensus mark is $465 million, suggesting a 57.6% rise from the year-ago quarter’s actual.
Spotify Technology’s Stock Skyrockets, Valuation High
SPOT shares have soared 100.4% in a year, outperforming the 50.8% rally of its industry and the 16.5% rise of the Zacks S&P 500 composite.
1-Year Price Performance
SPOT is currently trading at a trailing 12-month price-to-earnings ratio of 58.82X, higher than the industry’s 40.45X.
SPOT’s Investment Considerations
Spotify Technology’s growth story is driven by AI-led innovation, which has boosted its MAUs over recent quarters. There was a 16.9% increase in MAUs from the first to the fourth quarter of 2023. By the end of the fourth quarter of 2024, MAUs had grown 10% from the previous-year quarter. In the first quarter of 2025, 3 million MAUs were added. This trend highlights SPOT’s successful AI-enhanced developments from AI DJ to AI Playlist.
This optimistic growth in MAUs drove the top line 15% year over year in the first quarter of 2025. With the gross margin expanding by 400 basis points and operating expenses decreasing 3% year over year, SPOT demonstrated its strong operating leverage. Spotify Technology’s positive user growth outlook, combined with its ability to diversify geographically, positions it well to achieve its goal of reaching a billion users globally by 2030.
Meanwhile, fierce competition from Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) may hinder Spotify Technology’s growth capacity. Apple Music and Amazon Music proactively tend to capture the U.S. paid audience, thus reducing SPOT’s share in the market pie. Although Spotify Technology’s recommendation algorithms are superior, Apple Music’s lossless and spatial audio and Amazon Music’s Prime Subscription positions them well in the audio streaming domain.
Final Verdict
Spotify Technology’s historic growth path, fueled by its AI-driven innovations, and its strong revenues and profit outlook tend to attract investor attention. However, the combination of a negative Earnings ESP and the company’s Zacks Rank suggests that its earnings may fall short of expectations. Declining EPS estimates indicate a lack of analyst confidence and raise red flags.
The stock has performed impressively over the past year. However, its high valuation may make it a risky choice for investors. Although the company’s user growth prospects seem promising, the highly competitive nature of the audio streaming industry may hinder this growth. Hence, we recommend existing investors hold the stock for now. New buyers are urged to wait till the earnings release or a pullback that may mitigate downside risks.