Is SPOT a good stock to buy? We came across a bullish thesis on Spotify Technology S.A. on The Reservist’s Substack by Yehoshua Zlotogorski. In this article, we will summarize the bulls’ thesis on SPOT. Spotify Technology S.A.’s share was trading at $531.17 as of April 15th. SPOT’s trailing and forward P/E were 42.95 and 35.97 respectively according to Yahoo Finance.
Dolby, Music
Spotify is positioned as a leading global audio aggregator with strong moats, mild network effects, and durable user engagement, underpinning a long-term growth thesis centered on scale, monetization, and operating leverage. The original thesis projected MAU growth to nearly 1 billion users, expanding revenues to €28.9 billion by 2030 with improving margins and a premium valuation multiple, implying substantial upside.
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Performance through 2025 exceeded expectations, with MAU growth and user conversion outperforming forecasts, as premium and ad-supported segments grew 10% and 12% respectively while maintaining a strong premium mix. Although ARPU remained broadly flat due to delayed rollout of higher-priced tiers, global price increases and steady margin expansion to 32% indicate improving operating efficiency.
Key risks such as label negotiations have largely been resolved, while competition and AI are now viewed as manageable, with AI increasingly seen as a net positive for the platform. The primary uncertainty remains ad monetization, where ARPU lags significantly despite substantial upside potential, making it a central focus for future execution. Looking ahead, Spotify is expected to sustain mid-to-high single-digit user growth, introduce higher-priced premium tiers, and gradually expand profitability, targeting approximately $5 billion in operating income by 2027.
While the stock is no longer deeply undervalued, current valuation still implies conservative assumptions around customer lifetime and monetization, suggesting room for further upside. Overall, Spotify remains a high-quality, resilient platform with multiple levers for continued growth and value creation.
Previously, we covered a bullish thesis on Spotify Technology S.A. (SPOT) by Kroker Equity Research in April 2025, which highlighted the company’s transformation into a profitable, cash-generating platform driven by strong user growth, pricing power, and margin expansion. SPOT’s stock price has depreciated by approximately 3.27% since our coverage. Kroker Equity Research shares an identical view but emphasizes on sustained profitability and free cash flow growth.
Spotify Technology S.A. is on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 121 hedge fund portfolios held SPOT at the end of the fourth quarter which was 116 in the previous quarter. While we acknowledge the risk and potential of SPOT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SPOT and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
