To The Moon

$Spotify Technology S.A.(SPOT)$ is scheduled to report its fiscal Q4 2025 earnings on Tuesday, February 10, 2026, before the market opens.

Following a year where Spotify pivoted hard toward "efficiency" and "monetization," this report is a critical indicator of whether their aggressive pricing strategy is starting to hit a ceiling or if they are truly becoming the "money printer" analysts have predicted.

Key Estimates & Guidance

The following table outlines the consensus expectations for the Q4 print:

Spotify (SPOT) reported its fiscal Q3 2025 earnings on November 4, 2025. While the headline numbers were strong—marking the company’s "Year of Efficiency"—the stock faced immediate pressure due to a "conservative" forward outlook.

Q3 2025 Earnings Summary: The Numbers

Spotify effectively "beat across the board" for the third quarter, signaling that its shift from growth-at-all-costs to sustainable profitability is working.

• Monthly Active Users (MAUs): 713 Million (+11% YoY), beating guidance by 3 million.

• Premium Subscribers: 281 Million (+12% YoY), in line with guidance.

• Revenue: €4.3 Billion (+12% YoY on a constant currency basis).

• Gross Margin: 31.6%, exceeding guidance by 50 basis points. This was a major win for investors tracking the company's path to 30%+ margins.

• Operating Income: €582 Million, significantly above the forecasted €485 million.

• Free Cash Flow: A record €806 Million for the quarter, highlighting Spotify's massive cash-generation capability.

The Guidance Given (For Q4 2025)

Management provided the following targets for the final quarter of 2025:

• Total MAUs: 745 Million (+32M net adds).

• Premium Subs: 289 Million (+8M net adds).

• Revenue: €4.5 Billion (a slight miss compared to the €4.57B Wall Street consensus).

• Gross Margin: Targeted to jump to 32.9%.

• Operating Income: €620 Million.

Lessons Learnt: Why the Stock Dipped Despite the Beat

Despite the record profits, the stock fell ~2% immediately following the report. Here are the three main lessons investors took away:

1. FX Headwinds are the "Hidden Villain"

The primary reason for the Revenue guidance "miss" wasn't a lack of users, but currency fluctuations. A stronger Euro against the Dollar created a significant headwind (estimated at ~620 bps).

• Lesson: At Spotify's scale, global currency volatility can mask strong underlying operational performance. Investors should look at "Constant Currency" growth to see the true health of the business.

2. The "Pricing Power" Paradox

Management noted that Q4 subscriber adds (8M) would be "slightly below" previous years because of anticipated churn from price increases in 150+ markets.

• Lesson: Spotify is no longer afraid to lose a small percentage of "low-value" users to gain "high-value" Average Revenue Per User (ARPU). They are prioritizing profitability over absolute sub counts, a major shift in their corporate DNA.

3. Advertising is the "Slow Burn"

While the Premium side is firing on all cylinders, the Ad-Supported segment (especially Podcasts) has been slower to recover. CFO Christian Luiga called 2025 a "transition year" for ads, with the real turnaround expected in late 2026.

• Lesson: Don't expect a sudden explosion in ad revenue. The "Ads Flywheel" is moving toward programmatic and auction-based sales (via the Spotify Ad Exchange), which takes several quarters to scale.

Key Metrics to Watch

1. Pricing Power vs. Churn

In January 2026, Spotify announced its third U.S. price hike in recent years, pushing the individual plan to $12.99/month. This makes Spotify $2/month more expensive than its primary rivals (Apple and Amazon).

• The Test: Investors will watch for any commentary on subscriber churn. If Spotify can maintain its +8M net sub guidance despite being the most expensive service, it proves their platform has "sticky" pricing power.

2. Gross Margin Expansion

Spotify has historically been dogged by thin margins due to heavy royalty payouts. However, the expansion into Audiobooks and the Spotify Partner Program (video podcasts) is designed to diversify costs.

• The Goal: A jump toward the 33% gross margin mark is the "holy grail" for the stock right now. Anything less might suggest that royalty costs from new 2025 licensing deals are eating the gains from price hikes.

3. Advertising Recovery

While Premium subscriptions are 88% of revenue, the Ad-Supported segment has been the laggard. In Q3 2025, ad revenue saw a deceleration.

• The Signal: Management’s outlook on the "ads turnaround" for 2026 will be a major factor in whether the stock can break past recent resistance levels.

Spotify (SPOT) Price Target

Based on 39 analysts from Tiger Brokers app offering 12 month price targets for Spotify in the last 3 months. The average price target is $719.03 with a high forecast of $939.68 and a low forecast of $487.00. The average price target represents a 70.14% change from the last price of $422.61.

Short-Term Trading Opportunities

The stock has shown significant volatility post-earnings throughout 2025. Here is the setup for a short-term trade:

The Bull Case (The "Beat & Raise"): If Spotify beats on EBIT (Operating Income) and provides strong 2026 guidance based on the February U.S. price hikes, expect a move toward the $590 - $650 range. Recent share price weakness (down ~28% in late 2025) has improved the valuation, making a "relief rally" likely on good news.

The Bear Case (The "Churn Trap"): If management expresses caution about U.S. subscriber growth following the price hike, or if Gross Margins stay flat at ~31.8%, the stock could retest the $500 support level.

Implied Move: Based on historical trends, the market often prices in a 7–10% move on the day of the announcement.

The options prices predicted a ±9.7% post earnings move, compared to a -2.2% actual move. The options market overestimated SPOT stocks earnings move 46% of the time in the last 13 quarters. The predicted move after earnings announcement was ±9.4% on average vs an average of the actual earnings moves of 8.8% (in absolute terms).

Technical Analysis - Exponential Moving Average (EMA)

We are seeing Spotify did suffer a significant decline recently, and these recent downward pressure is driven by a combination of leadership changes, cautious financial guidance, and valuation concerns.

Another factor is the price hikes, so investors are watching closely to see if this will cause "subscriber churn" (people canceling their accounts) in a saturated market. This could be the reason why investors might be dumping this stock, but we might want to watch the price action closely on Monday (09 Feb) and see if Spotify earnings could show that price hikes actually helps with breaking the growth engine.

On the technical side, the SPOT bears are currently in control, though we are seeing an attempt to create an upside movement, so this quarter earnings would be in focus whether SPOT could show a much positive guidance.

Summary

Spotify (SPOT) reports its fiscal Q4 2025 earnings on Tuesday, February 10, 2026, before the market opens. After a turbulent 2025 defined by aggressive monetization and executive shifts (including Daniel Ek moving to Executive Chairman), this report serves as a pivotal test of Spotify’s long-term "audio utility" thesis.

The "Beat & Raise" Setup

Analysts generally expect Spotify to meet its guidance for 745 million MAUs and 289 million Premium Subscribers. However, the focus is less on user counts and more on Operating Income (EBIT).

• The Opportunity: Consensus EBIT sits around €620–€659 million. A beat here—driven by "Year of Efficiency" cost-cutting and lower-than-expected social charges due to recent stock price weakness—could trigger a sharp relief rally.

Three Pillars of the Analysis

1. The Pricing Power Litmus Test: In early January 2026, Spotify raised U.S. prices to $12.99/month. Because this puts Spotify $2/month above its biggest competitors (Apple/Amazon), investors are hyper-focused on churn guidance. If Spotify maintains high retention despite being the "premium-priced" option, it confirms massive brand loyalty.

2. Gross Margin Trajectory: The goal is a jump to 32.9%. While new 2025 licensing deals increased royalty costs, the rollout of the "Superfan" tier and expanded audiobook access are expected to provide the necessary margin offset.

3. Currency & Valuation: In Q3, currency headwinds (strong Euro) masked a double-digit revenue beat. With the stock currently trading ~28% off its 2025 highs, many analysts view the valuation as "de-risked," suggesting the market has already priced in the conservative revenue guidance.

Short-Term Trading Outlook

• Bullish Scenario: A guidance raise for 2026 margins and commentary showing stable retention after the U.S. price hike could push the stock toward the $590–$630 range.

• Bearish Scenario: If churn estimates for the $12.99 plan are higher than expected, or if the "Ad-Supported" segment continues to lag, the stock may retest support near $475.

Bottom Line: Spotify has successfully pivoted from a growth-story to a profit-story. This quarter is about proving that their price hikes can stick without breaking the growth engine.

Appreciate if you could share your thoughts in the comment section whether you think Spotify could continue its profit growth and its price hikes would further enhance its growth engine.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.