Spotify Technology S.A. (SPOT) stock has soared 35% in 2025, crushing the market and big tech because its booming paid subscription streaming music business is as tariff-proof as possible when it comes to multinational technology companies.
Spotify’s recent outperformance is part of a tech-destroying 450% climb in the past three years as Wall Street celebrates its user and revenue growth and ability to start churning out profits. Its price hikes and a dedication to the bottom line helped Spotify report its first full-year profit in 2024.
The streaming music company’s stock bounced back in a big way on Wednesday, finding support at a key technical range, after slipping on Tuesday following its 'disappointing' Q1 2025 report.
Spotify’s outlook remains strong, and its technical levels and valuation are enticing. Plus, its core subscription streaming business is somewhat recession-proof and insulated from the tariff fight since it primarily impacts goods.
This Soaring Tech Stock’s Long-Term Bull Case
Spotify permanently changed the music industry in the way Netflix altered Hollywood. SPOT’s business model is straightforward, and its streaming app often becomes essential to users’ daily lives and routines. This backdrop helped Spotify roll out price hikes in 2023 and 2024.
The Stockholm, Sweden-headquartered company is thriving as users flock to the streaming service for music, podcasts, and, more recently, audiobooks. Despite competition from Apple, Amazon, and Alphabet, Spotify remains the king of streaming music. Spotify reportedly holds 32% of the global streaming music market share, blowing away No. 2 Apple Music’s 15%.
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Spotify grew its monthly active users by 95% between 2020 and 2024, soaring from 345 million to 675 million. During that stretch, it expanded its paid Premium Subscribers by 70%, closing 2024 with 263 million.
SPOT averaged over 18% revenue growth in the past six years after its 2018 IPO. Spotify told investors when it went public that it would prioritize user growth over profits to establish itself as the dominant streaming service. Spotify’s user growth is also vital for negotiating favorable rights deals with artists.
The company began to pivot away from growth at all costs several years ago as interest rates soared. Its price hikes and a dedication to streamlining its business, including cutting nearly a fifth of its workforce, helped Spotify report its first full-year profit in 2024 (from an adjusted loss of -$2.96 in FY23 to +$5.95 a share). On top of that, SPOT expanded its free cash flow 240% last year to $2.47 billion.
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Spotify’s pitch to Wall Street is straightforward: we operate a business unlikely to go out of style anytime soon. On top of that, our prices (Premium Individual: $11.99, Premium Family: $19.99, and so on) are reasonable enough that we will continue to grow during economic downturns because simple pleasures don’t get cut, especially not ones as entrenched as listening to music and podcasts.
Breaking Down Spotify’s Recent Results and Outlook
Premium Subscribers grew 12% to 268 million in the first quarter of 2025, easily topping our 265.4 million estimate, boasting YoY growth across all regions.
This marked the highest first quarter net additions since 2020 (when Covid began) and the second-highest Q1 in company history. Spotify expanded its monthly active user base by 10% to 678 million, matching our estimate.
SPOT fell well short of our Q1 earnings estimate, dragged down, in part, by a massive payment for employee salary-related taxes tied to its soaring stock price. The firm paid €76 million in so-called Social Charges in Q1, which were “€58 million above forecast due to share price appreciation during the quarter.”
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Looking ahead, Spotify expects to add approximately 11 million net new MAUs in the second quarter to reach 689 million, below our 695 million estimate. Thankfully, it expects to add 5 million net new Premium Subscribers to reach 273 million, solidly above our 271.5 million estimate.
Spotify is expected to grow its revenue by 16% in 2025 and 15% next year to reach $22.55 billion, roughly double its 2021 total. It is projected to grow its adjusted earnings by 78% and 31%, respectively, according to the most recent Zacks estimates, which are likely to be adjusted slightly lower.
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Still, its overall earnings revisions picture remains upbeat to help it land a Zacks Rank #1 (Strong Buy), and its business remains resilient in the face of tariffs and economic uncertainty. “Engagement remains high, retention is strong, and thanks to our freemium model, people have the flexibility to stay with us even when things feel more uncertain,” chief executive Daniel Ek said in a press release.
“So yes, the short term may bring some noise, but we remain confident in the long-term story, and the direction we’re heading in feels clearer than ever.”
Time to Buy this Tariff-Proof Tech Stock Before a Breakout?
Spotify shares have ripped 35% in 2025 to blow away the S&P 500's -6% drop and Tech’s -11% decline. Its strong results, recession-proof business, and resistance to the tariff war have driven its YTD climb. This is part of a 450% run in the past three years to leave Tech’s 45% in the rearview.
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SPOT’s surge off its 2022 lows has pushed it up over 300% since its 2018 IPO, topping Tech’s 165% and Netflix’s 288%.
On the valuation front, Spotify’s impressive earnings growth outlook helps it trade at a 65% discount to the Tech sector, with a 0.7 Price/Earnings-to-Growth (PEG) ratio.
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It is trading roughly 6% below its highs after its mid-week rebound. Spotify found support at its 50-day and its pre-Q4 earnings release peaks before it gapped up to a record.
The stock might breakout to new all-time highs in the coming weeks. That said, any pullback down to Spotify's 200-day moving average would mark a screaming long-term buying opportunity.
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