Spotify Price Target Cut 13% to $700 Despite 6% Q4 Revenue Growth
JPMorgan reduced its Spotify price target by 13% to $700 from $805 while maintaining an Overweight rating, citing subscription price increases as a buffer against rising royalty costs. In Q4 2025, MAUs rose 11% to 751 million and revenue grew 6% year-over-year to €4.5 billion.
1. JPMorgan Price Target Reduction
JPMorgan trimmed its Spotify price target by 13%, lowering it to $700 from $805 while affirming an Overweight rating. The firm cited recent subscription fee hikes as a hedge against projected higher royalty expenses in 2026 and tempered investor optimism about AI-driven growth.
2. Q4 2025 User Growth
In the fourth quarter of 2025, Spotify added 11% more monthly active users, reaching 751 million, and saw premium subscriber count rise 10% to 290 million, both slightly above internal guidance benchmarks.
3. Q4 2025 Financial Performance
Revenue climbed 6% year-over-year to €4.5 billion, driven by an 8% jump in premium subscription revenues to €4.0 billion which offset a 4% drop in ad-supported revenue. Gross profit rose 10% to €1.50 billion, boosting margins by 90 basis points to 33.1%, while operating profit expanded 47% to €0.70 billion with operating margins improving 430 basis points to 15.5%.
4. Q1 2026 Outlook
Management projects adding eight million new MAUs in the first quarter of 2026 (three million paying subscribers), targeting 759 million MAUs and 293 million premium users. Revenue is expected to remain flat at €4.5 billion due to forex headwinds.