Spotify stock

The Goldman Sachs tower in New Jersey. Photo Credit: Jordan Merrick

After releasing a seemingly solid Q3 earnings report on Tuesday, Spotify has now seen its shares (NYSE: SPOT) slide by roughly 6% on the week. Meanwhile, despite being generally optimistic about SPOT’s path forward, analysts are pulling back on their target prices.

We covered several of those adjusted targets earlier this week. Barclays, for instance, reduced its SPOT target from $750 to $700, compared to $830 for Bernstein (down from $840) and $800 for Guggenheim (down from $850).

And perhaps most notably, the once-bullish Goldman Sachs, having settled on a neutral rating and a $765 SPOT target in late September, again sliced its own target following the company’s third-quarter earnings release. The newer target came in at $735 – or well beneath Spotify stock’s June peak of almost $800 per share.

Admittedly, “bearish” probably isn’t an apt descriptor for these and different SPOT forecasts. Hovering around $613 per share at the time of this writing – down 6.4% from Monday but up 53% year over year – Spotify stock still has plenty of room to grow before cracking the price points.

However, the downward-trending targets do represent a noteworthy contrast to the unbridled enthusiasm that previously defined SPOT analyses. Furthermore, is the shift the result of broader market factors or, on the other hand, material changes to Spotify’s operational footing?

We don’t have a precise answer, but evidence suggests that the former, including a bit of previous overenthusiasm, might be the culprit.

In the first place, in keeping with the above-mentioned YoY valuation spike, the SPOT train has been accelerating – possibly a bit too quickly – in recent years. Forget about a 10% annual return; even after the week’s slip, those who scooped up SPOT in late 2022 have seen the size of their investments swell by an astonishing 665% or so.

More pressingly, the key realities of Spotify’s core operations haven’t necessarily changed in the interim. Though much is being made of Q3’s not-so-hot advertising showing, for example, achieving consistent ad-supported growth has long been a challenge for the company, which is making big user gains in emerging markets.

Time will tell whether a video push, an inventory-availability expansion, and loosened free-tier restrictions can drive the performance improvements execs are anticipating for 2026’s second half.

Nevertheless, certain things have changed for Spotify; Individual’s $9.99 price point is now a distant memory. While plateauing U.S. subscriber growth and continued feature rollouts mean another stateside bump is likely in the near term, it’s unclear how much pricing room Spotify possesses given that rivals including Apple Music and Amazon Music are less inclined to up their own charges.

Against this backdrop, all eyes are on efforts to enhance superfan monetization, which Goldman believes “could add $6.6 billion to the industry’s revenues by 2035.”

But major questions remain here – especially because many diehards are already paying an arm and a leg to see live performances, buy merch, and collect physical releases. Also important for Spotify (and its stock price) is stiff superfan competition from OpenWav and more.