Cantor Fitzgerald has reduced its price target for Spotify (NYSE:SPOT) to $525.00 from $615.00 while maintaining a Neutral rating on the shares. The analyst note, from Deepak Mathivanan at Cantor Fitzgerald, follows the streaming company's fourth-quarter report and reflects concerns around Spotify's valuation despite operational beats.
According to Cantor Fitzgerald, Spotify's fourth-quarter revenue was largely in line with expectations. The firm highlighted operating income as the stronger metric, saying it came in 8% above prior Street estimates, or 1% higher when excluding social charges. Mathivanan also pointed to a fourth-quarter gross margin of 33.1% - 20 basis points above guidance - which the analyst attributed to favorable content costs.
The company added substantial user counts in the quarter, with 38 million monthly active users and 9 million premium subscribers joining during the period. Cantor Fitzgerald said these additions demonstrate solid performance on both user acquisition and conversion fronts.
Looking to 2026, Spotify guided first-quarter gross margin to expand 120 basis points year-over-year to 32.8%, a figure Cantor noted sits ahead of Street expectations of 32.3%. Cantor attributed the margin outlook in part to the benefit of recent price increases. The company also indicated it will present a deeper look at artificial intelligence product opportunities at its Investor Day on May 21, 2026.
Despite those operational positives, Cantor Fitzgerald kept its Neutral stance because it views Spotify as trading at a premium valuation. The brokerage also observed that Spotify shares have lagged the Nasdaq year-to-date by roughly 18 percentage points, a shortfall it linked largely to investor concerns around AI.
Still, Cantor said it has grown more confident in Spotify's competitive position in AI after the fourth-quarter results, even as that confidence was not sufficient to move the rating above Neutral given the stock's valuation.
Other brokerages issued a mix of responses to Spotify's quarterly report. Bernstein reiterated an Outperform rating and kept a $650.00 price target. BofA Securities maintained a Buy rating but lowered its price target to $750.00, calling the results "solid." Morgan Stanley preserved an Overweight rating, adjusted its target to $650.00 and reinstated Spotify as a Top Pick, noting the company's strategic emphasis on generative AI and the transition of CEO Daniel Ek to Chairman.
Not all analysts were upbeat: Pivotal Research downgraded Spotify from Buy to Hold, citing concerns about the future of the streaming market while acknowledging Spotify's dominant market share. Citizens reiterated a Market Outperform rating with a $800.00 price target, pointing to Spotify's multi-vertical platform and large user base as strengths. Collectively, these analyst actions reflect a mix of optimism around operational traction and AI strategy and caution driven by valuation and market-structural questions.
Context reminder: The analysis above is based on the firms' published ratings, targets and management guidance as described in the companies' fourth-quarter report and subsequent analyst commentary.