Bernstein Initiates Coverage of Spotify (SPOT) With an Outperform Rating

On June 3, Bernstein analyst Ian Moore initiated coverage on Spotify Technology S.A. (NYSE:SPOT) with an Outperform rating and assigned a price target of $825. The analyst is optimistic about the company’s ability to attract premium users and increase revenue through higher-priced subscription options, which supports his positive rating.

The initiation was part of Bernstein’s broader coverage initiation on the U.S. entertainment sector, which included similar Outperform ratings on names like Live Nation (NYSE:LYV), DraftKings (NASDAQ:DKNG), TKO Group (NYSE:TKO), and Warner Music (NASDAQ:WMG). Moore is constructive on companies that can directly monetize superfans through exclusive experiences, higher-tier pricing, and direct-to-consumer engagement.

A person on a laptop in the night, listening to Arabic music through a streaming application.

According to the analyst, Spotify stands out within the broader entertainment sector for its potential to drive strong long-term growth by catering to “superfans”, a highly engaged and price-insensitive segment of users. These superfans are expected to play a central role in the next phase of profitability for the entertainment industry, particularly in the music streaming sector.

Spotify’s planned superfan subscription tier is expected to be a key driver of growth, according to Moore. Once introduced, it is likely to see swift adoption among current users and new subscribers, boosting gross profit growth to the high 20% range and pushing long-term gross margins above 40%.

Furthermore, the demand for premium content and personalized experiences remains strong, which makes price increases and tiered subscription models more viable for music services. Spotify is well-positioned to benefit from this trend because of its global reach, focus on user experience, and expansion into podcasts and other audio formats.

Spotify is one of the world’s most popular audio streaming subscription services, with over 678 million users, including 268 million subscribers across more than 180 markets as of March 2025.

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Disclosure: None.