Spotify Upgrade Signals 39% Upside

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•  23 Jan 2026
 

•   SPOT  
   
  +2.82%

$SPOT Spotify is back in focus as traders and investors monitor its performance after a 28% drop since October. The company received an upgrade from Goldman Sachs from neutral to buy, with a price target of $700, signaling a potential upside of 39% from current levels. This suggests Spotify could be an attractive investment despite recent volatility, especially for traders seeking growth in the streaming sector.

Other analysts offer mixed perspectives. Barclays lowered its price target to $625 while maintaining an overweight rating, and Wells Fargo cut its target to $710. The overall consensus sits near $740, indicating a potential 47% upside from current prices. For investors, Spotify presents a stock worth watching closely for strategic entry points.

Goldman Sachs notes that the recent decline was mainly due to concerns about slowing revenue growth. However, analyst Eric Sheridan expects Spotify gross margins to improve steadily by 0.8–1.0% annually over the next four years, supported by stronger negotiating power with rights holders, stable podcast costs, and growth in advertising revenue.

Spotify recent financial performance supports this outlook. The company reported a Q3 2025 gross margin of 31.6%, up from 29.2% a year earlier, fueled by price increases in Europe and Latin America. While Q2 2025 added 8 million premium subscribers, the stock fell 11% due to tempered growth expectations. Traders should view this dip as a short-term fluctuation rather than a reflection of long-term growth potential.

Strategic initiatives further strengthen Spotify position. Partnerships with Netflix on video podcasts, expansion into audiobooks, and AI-driven personalized playlists like “Prompted Playlist” have boosted engagement and reduced churn. Monthly active users are projected to reach 689 million, up 13% year-over-year. In 2025, Spotify achieved its first annual operating profit of €266 million, driven by workforce optimization and focus on profitable podcast content. Advertising revenue grew 8% with new video podcast formats attracting younger audiences.

Competition remains strong from Apple Music and YouTube Music, but Spotify global reach, strong relationships with creators, and innovative offerings provide a competitive advantage. With AI-powered personalization and a growing footprint in audiobooks and video content, the company is well-positioned to capitalize on evolving trends in streaming.

For traders and investors seeking a high-upside stock with strong growth potential and improving margins, Spotify represents a compelling opportunity. Explore our full analysis to see why the company could be one of the most promising streaming investments for 2026 and beyond.

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