Table of Contents
- Course change: +19.0%
- Current course: ~$494
- TIKR model goal: $958
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What happened?
Spotify Technology (SPOT) jumped 19.0% on Tuesday to close at $494
Spotify hit a new all-time high as investors aggressively piled up shares after its fourth-quarter earnings report was a “banger”.
The main trigger was a stunning increase in profitability: the company reported one Earnings per share (EPS) of €4.43 and thus exceeded the consensus estimate of €2.74.
Investors were particularly impressed by the company’s operational discipline as monthly active users (MAUs) rose to 751 million.
The optimistic sentiment was supported by the company’s forecast for the Expansion of gross margin further heated.
Management expects improvement by 2026 as price increases and efficiency improvements take effect.
Goldman Sachs analysts immediately raised their price targets, citing the “cleanest” quarter in years.
They argued that Spotify has finally transitioned from a “growth-at-all-costs” story to an earnings growth machine.
Free cash flow reached a record 834 million euros in this quarter.
The market is now anticipating a scenario in which Spotify profitably dominates the entire audio landscape, from music to audiobooks.
See analysts’ growth forecasts and price targets for Spotify stock (free!) >>>
Is Spotify undervalued today?
During the earnings release, outgoing CEO Daniel Ek and the new leadership team laid out the case for sustainable, long-term growth.
Co-CEO Alex Norstrom highlighted the magnitude of the success: “It’s simply incredible that we now serve over 0.75 billion people around the world… We experienced our highest quarter of net MAU growth ever.”
CFO Christian Luiga highlighted the financial transformation: “Free cash flow in the fourth quarter was 834 million euros… we ended the quarter with 9.5 billion euros in cash and short-term investments.”
Co-CEO Gustav Söderström addressed the AI opportunity directly: “There is no question in my mind that we will continue to be one of the big beneficiaries of AI… we already have the right business model.”
Read the full Spotify transcript on TIKR to see the 2026 roadmap >>>
After Advanced Valuation Model TIKR’s stock is still trading at a significant discount to its future cash flow potential.
- Course goal: $958
- Current course: ~$494
- Potential Upside: +94%
Review depth
The investment case for Spotify has shifted from a user growth story to a margin expansion story.
At a share price of ~$494, the market is starting to give the company profitability, but the $958 price target implies that margins will continue to skyrocket.
- The pricing power: Spotify’s ability to raise prices without skyrocketing customer churn proves that the service is stable and undervalued by customers.
- The efficiency engine: The restructuring and cost discipline have permanently reset the company’s operating leverage and resulted in record free cash flow.
- The Value Gap: The $958 price target reflects the belief that Spotify will increase its valuation multiple to the level of other tech platform giants as it integrates high-margin verticals such as audiobooks and AI tools.
If Spotify can maintain this level of execution through 2026, the path to $958 is paved by rapid earnings growth.
Conclusion: Cheers to the grades. With a massive 94% upside potential to $958, Spotify presents a compelling opportunity for investors who believe the audio giant has finally unlocked the secret to profitable scaling.
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Disclaimer:
Please note that the articles on TIKR are not intended as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analyst estimates. Our analyzes may not include breaking company news or important updates. TIKR has no position in the stocks mentioned. Thanks for reading and happy investing!
date: 2026-02-11 23:22:00
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