Spotify’s Stock Is Slipping After a Goldman Sachs Downgrade and CEO Switch-Up

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After a one-two combo of Daniel Ek stepping down as CEO and Goldman Sachs downgrading the company’s status, Spotify stock experiences a dip of 6.6%.

Shares of Spotify stock (NYSE: SPOT) dipped after the music streaming company announced CEO Daniel Ek’s plans to step down, effective January 1, to be replaced by co-CEOs Alex Norström and Gustav Söderström. This, coupled with Goldman Sachs downgrading the stock from “buy” to “neutral,” trimming its price target down to $765 from $770, has seen its stock dip 6.6% by the end of the week.

But it’s likely a temporary setback; SPOT is still 55% higher this year despite being 11% off its all-time high of $785 on June 27. Goldman Sachs has remained optimistic about streaming in general, and says much of Spotify’s growth potential over the past year is already reflected in the share price.

Further, Goldman Sachs expects Spotify to grow revenue “at a mid-teens percentage pace” over the next three to four years. That’s aided by steady subscription price increases, long-promised new pricing tiers, and rising paid user numbers in emerging markets. Next year, advertising revenue is expected to pick up as Spotify builds out its ad-buying tools and monetizes video podcasts.

Profit margins will also rise as Spotify improves the economics of its core music business, spreads fixed podcast costs over a larger revenue base, and scales higher-margin ad sales. It’s worth noting that music royalty payments as a share of revenue could fall from about 71% this year to 64% by 2030. Meanwhile, advertising could grow more than 16% a year between 2025 and 2028.

Overall, with Spotify shares up 120% since July last year, compared with a 20% gain in the S&P 500, Goldman Sachs said it sees “balanced risk and reward.”

Data from SensorTower suggests solid user gains ahead of Spotify’s Q3 earnings, with U.S. monthly active users up 2% year-over-year and international users up 9%. Goldman Sachs’ forecasts already assume about 5% annual growth in average revenue per paid user through 2030, the company said, suggesting regular price increases of around 6% a year and around 1 to 1.5 points of margin expansion per year.

Link to the source article – https://www.digitalmusicnews.com/2025/10/05/spotify-stock-slips-goldman-sachs-downgrade/