Spotify Technology (NYSE: SPOT) delivered a strong earnings report that reinforces the company’s leadership in audio streaming. It also signals that the company’s new initiatives will be a catalyst for future growth. For investors, that means it’s a good time to look at SPOT stock, which was down more than 34% for 2026 in early February.
Heading into earnings, the SPOT stock chart showed clear signals of being oversold. The earnings report supports a bounce higher, particularly as money is beginning to flow back into technology stocks.
As of the market close on Feb. 9, the stock price was below its lower Bollinger band, and the relative strength indicator was firmly in oversold territory. The 17% bump in the first hour of trading pushed the stock back to its 20-day simple moving average (SMA).
With positive subscriber momentum backed by Spotify’s foray into new products, including video and audiobooks, this is a solid entry point for investors looking for growth in 2026.
Analysts Have Been Leading the Way
Prior to the company’s earnings report, SPOT stock dropped sharply after KeyCorp lowered its price target to $720 from $830. That was slightly below the consensus price target of $724.16. KeyCorp wasn’t alone. Since the beginning of the year, many analysts have lowered their price targets for SPOT stock.
However, this is a time when investors have to separate the action of lowering the target from what the new target is. In this case, most of the targets are well above the stock’s $414.74 price as of the market close on Feb. 9. Several analysts also had a price target above the consensus price target.
It’s also important to note that, even with the lower price targets, most analysts have maintained a rating of Buy or its equivalent. In fact, the Spotify analyst forecasts show that 34 analysts rate SPOT stock, with 26 giving it a Buy or equivalent rating and only eight a Hold or equivalent rating.
Spotify Is Firing on All Cylinders
Revenue came in at 4.53 billion euros (approx. $5.27 billion), slightly above the €4.52 billion ($5.14 billion) estimated. However, the bottom line was the real story. Spotify delivered adjusted earnings per share (EPS) of €4.43 (approx. $5.16), which was significantly higher than the estimate for €2.78 (approx. $3.16).
The company also added 38 million monthly active users (MAUs). That brought the total number of MAUs to 751 million, which is up 11% year-over-year (YOY). Premium subscribers grew to 290 million, a 10% gain YOY. More importantly, growth in both segments occurred across all regions.
But with about two-thirds of the company’s subscribers still on the free plan, this quarter’s results show that Spotify is becoming more efficient at making money from each person while keeping its costs under control.
This showed up in the company’s operating margin, which came in at 15.5%, significantly higher than the 11.2% from the prior year’s quarter. This efficiency is being driven by a combination of pricing and mix.
Premium revenue grew—not only because of more subscribers, but also because Spotify was able to hike prices, strengthening the bottom line. Spotify is also demonstrating an ability to manage costs. Gross margin came in at 33.1%, higher than the company’s guidance of 32.9%.
However, investors are forward-looking, and that’s why they’re looking at ad revenue. Ironically, that was a weak spot in this report. But the idea is simple. This quarter was about increasing subscription numbers. This will allow Spotify to charge higher ad prices. Analysts believe that could lead to $1 billion in additional revenue in the next 12 months.
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