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Investing.com - Bernstein maintained its Outperform rating and $840.00 price target on Spotify (NYSE:SPOT), currently trading at $636.68 with a market cap of $130.49 billion, following the stock’s recent 11% decline. According to InvestingPro data, the company maintains a "GREAT" financial health score, despite trading above its Fair Value.
The research firm views the pullback as "an excellent entry point" while maintaining conviction in Spotify’s 2026 gross profit inflection. Despite the recent decline, the stock has delivered an impressive 87.68% return over the past year and 38.59% year-to-date. Bernstein attributes the stock decline to elevated Premium ARPU expectations for Q3, likely resulting from mismodeled German audiobook-linked price hikes and speculation about U.S. price increases. (InvestingPro subscribers have access to 15+ additional tips and comprehensive valuation metrics for SPOT.)
The firm notes that German audiobook-linked price increases are unlikely to take effect until the first quarter of 2026 due to local regulations, rather than in the near term as some investors may have anticipated.
Bernstein believes Spotify maintains "sizable runway" to implement price increases as "the only truly differentiated digital audio platform," though management’s cautious comments suggest these increases won’t occur without corresponding value additions.
The research firm sees potential for video-linked price increases in developed markets in Q4, with additional pricing opportunities in 2026 tied to new audiobook languages, enhanced AI features, and possible superfan subscription tiers.
In other recent news, Spotify reported its second-quarter earnings, revealing total revenues and operating income that fell below analyst expectations by 2% and 16%, respectively. This shortfall was attributed to foreign exchange headwinds and social charges. Despite these challenges, the company experienced stronger-than-expected subscriber growth, with 8 million net additions, bringing the total to 276 million, surpassing guidance by 3 million. Monthly active users also exceeded expectations, increasing by 18 million to 696 million, which was 7 million more than forecasts.
Analyst firms have responded with varied adjustments to Spotify’s stock price targets. Benchmark and Guggenheim both lowered their price targets to $800, maintaining a Buy rating, citing concerns over average revenue per user and foreign exchange impacts. Rosenblatt also reduced its target to $679 while maintaining a Neutral rating. Cantor Fitzgerald kept its Neutral rating and $640 price target on the stock.
In contrast, Oppenheimer upgraded Spotify to Outperform, setting a price target of $800. The firm highlighted Spotify’s growth potential, mentioning opportunities in user monetization and benefits from App Store changes. These developments reflect mixed reactions from analysts regarding Spotify’s financial outlook and growth trajectory.
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