Spotify’s stock performance in 2025 has reflected both confidence in the company’s long-term potential and growing caution around its near-term outlook. Shares are up approximately 27% year-to-date, signaling strong overall gains, but the rally has cooled in recent months. Since late June, when Spotify’s share price approached the $800 mark, the stock has fallen by roughly 25%, highlighting increased market volatility around the streaming giant.
Analysts remain divided on where Spotify heads next. Goldman Sachs recently downgraded the stock, pointing to emerging uncertainties, while J.P. Morgan and Bank of America Securities struck a more optimistic tone, issuing price targets of $805 and $900 respectively. The contrasting outlooks underscore a broader debate over whether Spotify’s current challenges are temporary growing pains or signs of deeper structural pressure.
A major factor influencing investor sentiment is Spotify’s upcoming leadership transition. The company is preparing to operate under incoming co-CEOs Gustav Söderström and Alex Norström, marking a significant shift after years of sole leadership under founder Daniel Ek. While both executives are long-time Spotify insiders, the market appears to be pricing in uncertainty around how shared leadership will impact strategy, execution, and culture in the short term.
Advertising revenue has also emerged as a key concern. In the third quarter of 2025, Spotify’s ad revenue declined 6% year-on-year to €446 million ($523 million), despite an 11% increase in ad-supported monthly active users, which reached 446 million. Notably, this figure sits slightly below the revenue recorded in Q3 2023, even after Spotify expanded its offerings with new music formats, podcasts, video content, AI-driven marketing tools, and a dedicated ad exchange. Analysts argue that improving ad monetisation will be critical, particularly as subscriber growth slows in mature markets and free-tier restrictions were eased in September.
Adding another layer of complexity is Spotify’s growing use of AI-generated music. The platform is increasingly hosting machine-created tracks that are generating significant streams and royalty payments. While this trend presents new efficiencies and content opportunities, it also raises questions around listener engagement, artist relations, and advertiser perception — all factors that could influence revenue performance in 2026.
As Spotify enters the new year, it finds itself at a crossroads. Strong year-to-date gains point to enduring confidence in the brand and its global scale, but recent share price declines, mixed analyst forecasts, leadership changes, and evolving content strategies highlight the challenges ahead. How effectively Spotify navigates advertising growth, executive transition, and the expanding role of AI in its ecosystem may determine whether the company regains momentum or faces continued pressure in the months to come.