Spotify’s stock has been volatile over the years, but its business has been fairly steady. The Daily Breakdown dives into the details.
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Deep Dive
It’s that time of year when Spotify gives us our year-end wrap — so we’re doing one for Spotify itself. As most readers know, Spotify provides audio streaming services worldwide through its Premium and Ad-Supported segments. The company, founded in 2006 and headquartered in Luxembourg, has had a remarkable run as a public business.
After more than doubling from its 2018 opening price to its 2021 high, shares collapsed in the subsequent bear market, falling more than 80% — 🫣. But the rebound was even more dramatic: the stock rallied over 1,000% from those lows, eventually reaching an all-time high of $785 in June 2025.
The Business
As the chart above shows, premium users, monthly active users, and revenue have continued to climb steadily over the years. Even during Spotify’s brutal 2021–22 stock decline, the underlying business kept expanding. However, Spotify struggled with profitability for much of its history — from 2015 through 2023, it recorded only one year of positive operating income.
That changed in 2024, when operating profit surged, and it has grown even further in 2025. This shift to sustained profitability is a major reason the stock has seen such a powerful rebound from its lows.
Future Growth Projections
When we look toward the future, analysts remain optimistic about Spotify’s underlying growth potential. Notice how earnings growth is far outpacing revenue growth, which is a good sign for the company’s margins. According to Bloomberg, analysts project the following:
- Earnings Growth: 32.4% in 2025, 67.5% in 2026, and 27.7% in 2027
- Revenue Growth: 9.7% in 2025, 14.6% in 2026, and 13.9% in 2027
Analysts currently have a consensus price target of ~$773.50 on Spotify stock, implying more than 37% upside to today’s stock price.
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Diving Deeper
Now that shares have rallied more than 1,000% from their recent lows, Spotify’s valuation is under understandable strain. However, the stock’s ~28% decline from its summer highs has helped ease that pressure. Earlier this year, Spotify traded at more than 80x forward earnings, and even at its summer peak — when shares hit record highs — the multiple was still nearly 70x.
Now trading around 43x forward earnings, the stock sits just above the zone where it has recently found valuation support — roughly 40x. While this is still expensive by many investors’ standards, the multiple has compressed significantly. In fact, valuation has fallen by almost 50%, even though the stock itself has corrected only about half that amount. That tells us profitability is moving in the right direction.
Risks
Spotify competes in a difficult landscape, going up against giants like Apple, Amazon, and Alphabet’s YouTube. Competitive pressure is a constant risk — and so is valuation. If growth slows or expectations reset lower, the stock could face additional downside. Investors may also decide that a lower multiple is warranted regardless of competitive performance. Finally, Spotify has shown a tendency to decline more sharply than the broader market during pullbacks, meaning any notable S&P 500 correction could hit SPOT disproportionately hard.
The Bottom Line
Spotify has been a standout performer in recent years. For that to continue, the company must uphold its strong growth trajectory and keep boosting profits. After the recent dip, some investors will still view the stock as too expensive, while others may see the valuation reset as a fresh opportunity.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.