Spotify has little room to run, Goldman Sachs says
Spotify appears to have little room to run as investors have already priced in bullish developments coming out of the company, according to Goldman Sachs. The investment bank downgraded the audio streaming giant to neutral from buy. And while it slightly raised its 12-month price target to $770 from $765, that only implies 5.7% upside. “On the back of trailing 12-month stock performance and the scope to produce upsized operating performance ahead, we downgrade the shares,” Goldman Sachs analyst Eric Sheridan said in a note to clients. SPOT YTD mountain SPOT year to date Spotify is likely to introduce new premium pricing tiers through 2030 as well, which should bolster its bottom line as its monthly active user base continues to grow, Sheridan said. The platform has also pursued several cost-cutting measures, including modifying how it calculates leverage on royalty payments. However, the analyst reiterated that much of Spotify’s cost saving and revenue-driving measures already appear to be priced into the stock. “Spotify’s current EV/NTM Gross Profit of ~18.5x and EV/NTM Gross Profit-to-Growth of ~0.85x (based on FactSet consensus estimates) are both significantly above its historical averages since becoming a public company,” Sheridan wrote. “In our view, this current premium valuation vs. historical periods indicates that the steady topline growth + margin drivers we expect (outlined above) are priced in at current levels.” Goldman’s call goes against the majority opinion on Wall Street. Twenty-eight analysts rate Spotify a buy or strong buy, while just 12 have assigned the stock a hold rating, LSEG data shows. Spotify shares fell more than 3% following the downgrade. The stock was also under pressure after it announced Chief Executive Daniel Ek would transition to executive chairman. Alex Norstrom and Gustav Soderstrom will take over as co-CEOs, effective Jan. 1. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
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