Spotify Technology S.A. (SPOT): A Bull Case Theory

 We came across a bullish thesis on Spotify Technology S.A. on Nikhs’s Substack. In this article, we will summarize the bulls’ thesis on SPOT. Spotify Technology S.A.’s share was trading at $576.79 as of December 2nd. SPOT’s trailing and forward P/E were 74.59 and 42.92 respectively according to Yahoo Finance.

Spotify

Photo by Heidi Fin on Unsplash

Spotify Technology S.A., together with its subsidiaries, provides audio streaming subscription services worldwide. SPOT’s Q3 2025 results confirmed a structural inflection—execution itself has become the company’s moat. Long perceived as trapped between record labels and tech giants, Spotify has transformed into an execution engine that ships faster, cheaper, and better than peers. The company delivered €4.27 billion in revenue, €582 million operating income (20% above guidance), and a record €806 million free cash flow, while reaching 713 million MAUs.

Product velocity has become a competitive differentiator, with over 30 new features shipped in recent months—driving 17 million net additions and deeper engagement through in-app messaging and multi-format use across music, podcasts, and video. AI has evolved from powering recommendations to serving as Spotify’s operating system, automating app development and cutting costs dramatically.

Operating expenses declined 2% YoY even as revenue rose 12%, proving true leverage. Meanwhile, new licensing deals emphasize flexibility over cost reduction, enabling innovations such as broader video rights and integration with Netflix, which reinforce Spotify’s platform power. Together, these shifts form a self-reinforcing system: licensing flexibility fuels experimentation, AI enables efficient execution, and product velocity deepens engagement.

Advertising remains strategically optional, with Premium contributing 90% of revenue and record free cash flow even without ad growth. Consensus now reflects the inflection—revenue growth expected to accelerate to 15% in 2026, EPS to rise 77%, and margins to expand 200 bps by 2027. Yet, at 48× forward earnings, the stock is priced for perfection. The new co-CEO structure introduces execution risk, but if Spotify sustains its precision, the business could compound meaningfully. The engine is built; now it must endure.

Previously we covered a bullish thesis on Spotify Technology S.A. (SPOT) by Kroker Equity Research in April 2025, which highlighted Spotify’s transformation into a profitable, cash-generating business through pricing power and cost discipline. The company’s stock price has appreciated approximately 5.02% since our coverage. The thesis still stands as Spotify sustains structural scalability. Nikhs shares a similar view but emphasizes execution and AI-driven efficiency.

Spotify Technology S.A. is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 111 hedge fund portfolios held SPOT at the end of the second quarter which was 106 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.

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Disclosure: None.