Goldman Sachs Tower. Photo Credit: Far Chinberdiev
Four months later, Goldman Sachs has changed its tune on Spotify stock (NYSE: SPOT) by shifting back to a buy rating. But in keeping with a wider trend, the investment bank has also reduced its SPOT target price.
Goldman’s Eric Sheridan just recently upgraded Spotify stock from neutral to buy – besides settling on a $700 target. Though the latter represents a roughly 37% spike from SPOT’s current value, it’s still down from $735 previously.
In the analyst’s view, “long-term secular growth themes,” considered alongside SPOT’s approximately 28% valuation decline since October 2025, make for an attractive buying opportunity.
Of course, this past October also happens to be when Goldman’s Spotify stock downgrade began making waves. And to be fair, late September saw Daniel Ek disclose plans to swap his CEO title for executive chairman; Gustav Söderström and Alex Norström have been co-leading the company since 2026’s start.
While Ek’s exit presumably played a key part in the share-price decline, Goldman’s downgrade, especially given its timing and contrast to the firm’s bullish long-term outlook for the music industry itself, definitely didn’t help. Throw in a dash of price-increase disappointment – apparently, some investors had been hoping for larger U.S. bumps – and you’re left with a stock that’s nearly erased all its 2025 gains.
Explaining his SPOT outlook change of heart, Sheridan explored “the key industry and idiosyncratic debates that are most top of mind for investors.”
Stated briefly, these debates concern the ability of price increases (and superfan offerings) to drive ARPU growth; gross margin trajectory; and AI’s streaming-landscape impact.
Regarding pricing, Goldman acknowledged that related discussions had “likely acted as a headwind for the shares.” And when it comes to AI, it’s “too early to tell” the bigger-picture entertainment effects. However, Spotify’s well-entrenched position, presence across a variety of media types, label relationships, and more could enable it to capitalize on the AI boom, according to Sheridan.
“Looking over a long-term horizon,” he continued, “we see SPOT as well positioned against several long-term operating themes” – among them “steady” price hikes, MAUs growth, ad-supported revenue improvements, ad-supported conversions, and the rollout of new Premium tiers.
As we’ve covered in detail, SPOT downgrades have been accompanying (contributing to?) recent months’ pricing slip, with multiple analysts having laid out optimistic forecasts while simultaneously lowering their targets.
Ahead of Spotify’s February 10th fourth-quarter earnings release, Barclays this week maintained an overweight SPOT rating – and sliced its target from $700 to $625.
That’s just a bit higher than Presidents Capital’s new $620 target, though all these figures are well above SPOT’s value at market close today, about $513 (up 2.9%).
