Guggenheim has trimmed its price target for Spotify to $720 from $750 but left its Buy recommendation intact, citing a higher present cost of capital than in the firm’s previous model. The new target still implies substantial upside versus Spotify’s most recent share price of $476.02, and analyst targets around the street span a wide range from $507.80 to $907.93. Data from InvestingPro indicates Spotify is trading close to its Fair Value estimate.
The firm’s reassessment followed Spotify’s fourth-quarter results, which Guggenheim characterized as a "broad-based beat." Management’s first-quarter guidance met or topped both Guggenheim’s forecasts and consensus expectations. A standout metric in the report was the company’s largest-ever quarterly addition of monthly active users - 38 million new accounts - a development that underpinned an 8.06% price return for the stock over the past week, even as shares remain down 18.03% year-to-date.
Guggenheim highlighted Spotify’s continued levers for growth, noting that global premium subscriber penetration is about 3.5% of the population. The firm described this rate as offering a "significant runway" for further user expansion, particularly in light of the recent surge in new accounts. Management signaled that planned price increases should allow net revenue to grow faster than content costs in 2026, a dynamic the company expects will support margin expansion.
Those operational points dovetail with Spotify’s longer-term top-line trends: an 18% compound annual growth rate in revenue over the past five years and recent year-over-year revenue growth of 11.89%. InvestingPro metrics show the stock trades at a PEG ratio of 0.62, indicating a low price-to-earnings-to-growth relationship, even as the company’s P/E remains elevated at 60.
The company also addressed the marketplace’s questions on its artificial intelligence initiatives. Management emphasized a dual focus - protecting rightsholder value while pursuing new content opportunities and enhanced iterations of existing music, including covers and remixes. On the balance sheet front, InvestingPro’s assessment of Spotify’s financial strength is rated "GREAT," and the firm noted the company holds more cash than debt, positioning it to invest in AI and other strategic initiatives.
Investors will have another formal update on strategy and outlook at Spotify’s first Investor Day in four years, scheduled for May 21 in New York City, where the company may lay out additional detail on growth plans and financial targets.
Analyst reactions to Spotify’s quarter varied across the industry. Revenue for the quarter reached 4.53 billion, a 13% year-over-year rise excluding foreign exchange impacts, and the company reported a record gross margin of 33.1%.
- Evercore ISI reduced its price target to $700 but kept an Outperform rating, describing the quarter as mixed.
- IndeRes upgraded its recommendation to Buy from Accumulate and lifted its target to $595, citing stronger-than-expected operational execution and profitability alongside robust user growth in Q4.
- Monness, Crespi, Hardt maintained a Neutral stance while noting Q4 beat-and-raise dynamics.
- MoffettNathanson increased its target to $514, pointing to the companys capacity to expand gross margins even with approaching label renewals.
- Goldman Sachs adjusted its target to $670 and retained a Buy rating, expressing optimism about Spotifys long-term prospects.
These divergent target moves and ratings reflect a range of assessments about Spotifys path to profit expansion, content cost dynamics, and the implications of user growth for long-term value creation.
For investors and market participants focused on streaming, digital media, and broader technology equities, the quarter reinforced several themes: large-scale user acquisition remains a key growth driver; pricing power will be a critical lever for revenue-per-user expansion; and content cost management - especially around label renewals - will be central to margin trajectory. The adjustments to analyst targets underscore how changes in discount rates and modeling assumptions can materially shift fair-value estimates even when operating results are strong.