Evercore said that its FY26 and FY27 estimates have changed, with revenue reducing about 4%-5% and operating income down 3%-5%.
- Evercore ISI cut its price target on Spotify to $700 from $750 and kept an ‘Outperform’ rating.
- Canaccord analyst Maria Ripps said that its lowered target on Spotify comes amid a lower multiple applied to its 2027 revenue estimate.
- In the latest quarter, Spotify’s monthly active users grew 11% year-on-year to 751 million, while its premium subscribers jumped 10% higher to 290 million.
Spotify Technology (SPOT) on Tuesday reported fourth-quarter (Q4) 2025 results, posting better-than-expected earnings and a growth in users.
Despite the upbeat results, the audiostreaming company received a sleuth of downgrades from Wall Street analysts.
Evercore ISI cut its price target on Spotify to $700 from $750 and kept an ‘Outperform’ rating. Jefferies also lowered its price target on the company to $650 from $750 and maintained a ‘Buy’ rating.
Canaccord lowered Spotify’s pierce target to $750 from $850 and kept a ‘Buy’ rating on its shares.
Shares of SPOT were up nearly 15% at the time of writing.
Analyst Rationale
According to TheFly, Evercore said that while Spotify’s Q4 results were fundamentally and relatively good, the analyst said that its FY26 and FY27 estimates have changed, with revenue reducing about 4%-5% and operating income down 3%-5%.
However, Evercore added that it continues to view Spotify as the global leader in streaming audio, supported by accelerating monetization, durable user growth, and improving profitability.
Meanwhile, Jefferies said that Spotify’s Q4 results reinforce its positive view on the stock and Q1 gross margin guidance of 32.8% suggests label wholesale price increases won't pressure margins. However, the analyst noted that Spotify’s first-quarter (Q1) subscriber guidance of 3 million additions quarter-over-quarter was below the street’s expectation of 4 million.
However, Jefferies said that it doesn't view this as an issue, given Spotify's historical pattern of guiding to 2 million to 3 million quarter-over-quarter in Q1 consistently across the past four years.
Canaccord analyst Maria Ripps said that Spotify reported "solid" Q4 results, with all key metrics coming in ahead of expectations. Despite hitting its 14-month low in recent trading sessions, shares continue to trade at an "attractive valuation," the analyst said. However, the lowered target comes amid a lower multiple applied to the firm's 2027 revenue estimate, the analyst said.
Earnings Snapshot
In the latest quarter, Spotify’s monthly active users grew 11% year-on-year to 751 million, while its premium subscribers jumped 10% higher to 290 million.
The company posted net income of €1.17 billion ($1.39 billion) or €4.43 a share, up from €367 million, or €1.76 a share, a year earlier. Analysts, on average, were expecting a profit of roughly €2.78 a share, according to data from Fiscal.ai. Meanwhile, Spotify’s quarterly revenue increased 7% to €4.5 billion.
In the upcoming quarter, Spotify projects €4.5 billion in revenue, €660 million in operating income, and for total premium users to rise to 293 million by adding 3 million net new subscribers.
How Did Stocktwits Users React?
On Stocktwits, retail sentiment around SPOT shares jumped from ‘bullish’ to ‘extremely bullish’ territory over the past 24 hours.
Meanwhile, message volumes jumped from ‘high’ to ‘extremely high’ territory, climbing 720% in the past 24 hours, according to Stocktwits data from Tuesday morning.
One user noted that the latest earnings did not include Spotify’s recent U.S. subscription price increases. The user said that 2026 was going to be strong for the company.
Shares of SPOT have declined nearly 25% in the past year.
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