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Investing.com -- Oppenheimer upgraded Spotify (NYSE:SPOT) to Outperform with a $800 price target on strong upside from user growth, advertising monetization.
Shares are up 1.7% at $685.78 on Thus. trading.
Spotify shares are down 14% from all-time highs, but Oppenheimer argues that the company has “the longest runway” in large-cap internet, forecasting around 75 million net new users per year from 2026 to 2030.
It expects Spotify to reach only 17% of the global adult population by 2030, compared to much higher penetration at peers like Meta (NASDAQ:META) and YouTube.
A key driver of upside is the company’s under-monetized free tier. Oppenheimer sees €10 billion in potential ad revenue by 2030 if Spotify closes the gap with radio and podcast ad rates.
If ad monetization stalls, it expects the company could introduce a small fee around €1/month for its lowest tier, still yielding up to €12 billion in revenue.
The firm also sees support from recent App Store changes that improve paid user conversion on iOS, price increases supported by low churn, and the upcoming launch of a higher-priced “Superfan” tier.
While gross margin could face short-term pressure in Q3, Oppenheimer expects steady long-term gains, projecting 37% gross margin by 2030, up from around 31% in 2024.
It assumes this improvement even without changes to royalty costs, aided by podcast profitability and cost control.
The $800 price target is based on 20 times Oppenheimer’s 2030 earnings estimate of $52.53, discounted at 7% annually. It also factors in €20 billion in projected share buybacks and assumes Spotify will still hold €17 billion in cash by then.