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Investing.com - Bernstein has reiterated an Outperform rating on Spotify (NYSE:SPOT) with a price target of $830.00 following the company’s third-quarter results. This target represents significant upside potential from the current price of $629.60, though InvestingPro data suggests the stock is currently trading above its Fair Value. Notably, 4 analysts have recently revised their earnings upwards for the upcoming period.
The stock experienced significant volatility after the earnings report, swinging between a 7% gain and a 6% loss before settling down approximately 2%. This movement reflects broader market sentiment in consumer-facing technology, media, and telecommunications sectors. Despite this short-term volatility, Spotify has delivered impressive returns of 40.73% year-to-date and 64.55% over the past year, according to InvestingPro data.
Bernstein addressed three main bearish concerns that emerged following Spotify’s earnings call. The first concern involves potential delays in U.S. price increases, as management highlighted first-quarter 2026 gross margin seasonality. The second worry suggests fourth-quarter 2025 Premium net additions could underperform as new features reduce incentives for free users to upgrade.
The third bearish argument centers on the updated growth cadence for Spotify’s advertising segment next year, which some investors found difficult to accept. Bernstein dismissed these concerns, noting that they had already accounted for delayed U.S. pricing action.
Bernstein also views friction at the free-tier level as potentially positive for Spotify’s ecosystem, expecting about 60% of net additions to continue flowing from the free tier. The firm sees potential for accelerated execution with new demand-side platform partners, which could provide further upside to reset expectations for the second quarter of 2026. Spotify’s robust balance sheet supports these growth initiatives, with more cash than debt and liquid assets exceeding short-term obligations. The company generated $3.31 billion in levered free cash flow over the last twelve months, demonstrating strong operational efficiency.Want deeper insights? InvestingPro offers 16 additional ProTips and a comprehensive Research Report on Spotify, one of 1,400+ US equities covered with in-depth analysis.
In other recent news, Spotify has reported strong financial results for the second quarter of 2025, with total revenue reaching €4.2 billion, marking a 15% increase year-over-year in constant currency. The company also announced significant advancements in its AI capabilities and product offerings. Following these results, BofA Securities raised its price target on Spotify to $190 from $185, maintaining a Buy rating. Meanwhile, Goldman Sachs lowered its price target to $735 from $770, retaining a Neutral rating after Spotify’s mixed third-quarter results in 2025. Goldman Sachs noted Spotify’s healthy user performance and strong engagement, despite differing performance across its business segments. These developments reflect Spotify’s ongoing efforts to enhance its platform and expand its reach in the market.
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