Goldman Sachs has elevated its stance on Spotify, shifting the streaming audio giant's rating from Neutral to Buy while setting a revised price target of $700 per share. This valuation suggests an approximate 39% increase relative to Spotify’s current market price of $498.64, which is close to its 52-week low of $475.01. Though the updated target is below the analyst consensus high of $900, it demonstrates substantial confidence in the company’s growth prospects.
The upgrade precedes Spotify’s anticipated Q4 2025 earnings announcement, scheduled for February 10. Eric Sheridan, analyst at Goldman Sachs, references numerous long-term growth avenues that support the bullish outlook. The firm notes a significant downturn in market sentiment toward Spotify, with share prices falling 28% since October 1, 2025, a trend echoed by InvestingPro’s data indicating a 25.68% stock decline over six months. This drop stands in contrast to Spotify’s robust financial health status.
Goldman Sachs projects that Spotify will consistently enhance its gross margins by roughly 80 to 100 basis points each year over the upcoming three to four years, building upon its current gross profit margin of 31.85%. The bank forecasts periodic premium subscription price hikes occurring every one to two years, implemented in a staggered geographic approach. Additionally, Spotify plans to introduce new premium pricing tiers to diversify its revenue streams.
Strong positioning in the burgeoning field of generative artificial intelligence forms a key part of Goldman Sachs’ positive case. Spotify’s extensive global distribution network, a portfolio that includes various media types, longstanding partnerships with major record labels and an array of independent content creators, and significant data infrastructure for discovery and curation, provide substantial competitive advantages. With annual revenues near $19.84 billion and an 11.89% growth rate, Spotify has the financial capacity to invest in such technological progressions.
Additional growth catalysts identified comprise consistent monthly active user gains, especially in emerging markets, ongoing conversion of ad-supported users into paying subscribers, and expected acceleration in advertising revenue from 2026 onward. This latter development is anticipated to benefit from enhancements like the Spotify Ad Exchange marketplace and monetization of video podcast content. InvestingPro analysis highlights Spotify’s PEG ratio of 0.67, implying that despite a high price-to-earnings ratio of 63.5, the stock is undervalued relative to expected near-term earnings growth. For those seeking further valuation details and over fifteen specialized insights, a comprehensive Pro Research Report is available.
In related developments, Spotify announced an upcoming increase in U.S. Premium subscription pricing effective February. The Individual plan will rise by $1 to $12.99 monthly, the Duo and Family plans will increase by $2 to $18.99 and $21.99 respectively, and the Student plan will also climb by $1 to $6.99 per month. Following these moves, UBS analyst Batya Levi reaffirmed a Buy rating on the stock with an $800 price target. Deutsche Bank maintained its Buy recommendation and a $775 target, highlighting the subscription price increases as growth drivers. Benchmark adjusted its price target downward to $760 but continued to identify opportunities for operational leverage and incremental pricing in 2026. Jefferies reduced its target to $750 from $800, keeping a Buy rating and emphasizing possible revenue acceleration thanks to the pricing strategy. These initiatives form part of Spotify’s broader approach to strengthening its financial results through strategic pricing adjustments.