Spotify (SPOT) Fell Along with Highly Valued Stocks

Baron Funds, an investment management company, released its fourth-quarter investor letter for the “Baron Focused Growth Fund”. A copy of the letter can be downloaded here. The Fund delivered strong results in the fourth quarter, appreciating 12.34% (Institutional Shares) compared to the Russell 2500 Growth Index’s (the Benchmark) 0.33 % return. The Fund returned 22.26% in 2025 compared to 10.31% return for the index. The firm highlighted its continued faith in its portfolio companies in the letter. As of December 31, 2025, the Fund’s top 10 positions hold 60.1% of net assets. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Baron Focused Growth Fund highlighted stocks like Spotify Technology S.A. (NYSE:SPOT). Spotify Technology S.A. (NYSE:SPOT) is a leading audio streaming subscription service provider. On February 5, 2026, Spotify Technology S.A. (NYSE:SPOT) stock closed at $412.75 per share. One-month return of Spotify Technology S.A. (NYSE:SPOT) was -23.48%, and its shares are lost 33.75% over the past twelve months. Spotify Technology S.A. (NYSE:SPOT) has a market capitalization of $84.983 billion.

Baron Focused Growth Fund stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its fourth quarter 2025 investor letter:

“Spotify Technology S.A. (NYSE:SPOT) is a leading global digital music service, offering on-demand audio streaming through paid premium subscriptions and an ad-supported model. Shares of Spotify fell as richly valued stocks across a similar peer basket broadly underperformed. In our view, the company’s fundamentals remain intact. Despite recent price hikes, user growth has continued at a double-digit year-over-year pace, with engagement remaining high. Spotify has proven to be a sticky subscription product with relative resilience in times of consumer uncertainty. The company has been on a path to structurally increase gross margins on an annual basis, aided by its high-margin artist promotions marketplace, growing contribution from podcasts, and ongoing investments in advertising. Spotify also continues to innovate across its platform, improving advertising, expanding into video, developing a Super Premium tier, and taking more market share. We still view Spotify as a long-term winner in music streaming with potential to reach 1 billion-plus monthly active users.”

Jim Cramer Recommends Buying Spotify (SPOT) Shares During “Periodic Moments of Underperformance”

Spotify Technology S.A. (NYSE:SPOT) is in the 25th position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 116 hedge fund portfolios held Spotify Technology S.A. (NYSE:SPOT) at the end of the third quarter, up from 111 in the previous quarter. While we acknowledge the risk and potential of Spotify Technology S.A. (NYSE: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 Spotify Technology S.A. (NYSE:SPOT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Spotify Technology S.A. (NYSE:SPOT) and shared a list of stocks that should double by 2030. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.