Spotify's $599.51 Plunge: A Bearish Reversal Amid Record Earnings?

Summary
• Spotify Technology (SPOT) plunges 3.08% to $599.51, its lowest since October 2024
• Surpasses 700M Monthly Active Users, 12% subscriber growth, and €582M operating income
• Options chain shows 2025-11-28 calls at 610–620 strikes dominate with 39.87%–103.45% leverage ratios
• Bollinger Bands signal oversold territory as RSI hits 32.63, MACD turns negative

Spotify’s third-quarter earnings report—highlighting 700M users and €582M operating income—failed to shield the stock from a sharp intraday selloff. Despite robust user growth and margin expansion, SPOT’s 3.08% decline to $599.51 reflects investor caution over unresolved legal risks and aggressive price hikes. The options market, however, remains active, with leveraged call options at 610–620 strikes attracting high turnover. This divergence between fundamentals and sentiment sets the stage for a critical technical and strategic analysis.

Legal Clouds Over Earnings: A Bearish Dilemma
Spotify’s 3.08% drop stems from a confluence of factors: while Q3 earnings exceeded expectations with 12% subscriber growth and 56 bps gross margin improvement, a new class-action lawsuit alleging streaming fraud has cast doubt on platform integrity. The lawsuit, coupled with recent price hikes that triggered user cancellations, has eroded short-term confidence. Additionally, the company’s share buybacks—while signaling capital discipline—contrast with unresolved legal and operational risks, creating a tug-of-war between bullish fundamentals and bearish sentiment. The intraday low of $587.07 underscores the market’s skepticism, as investors weigh near-term legal exposure against long-term growth potential.

Bearish Setup with Leverage: Call Options and ETFs in Focus
• 200-day MA: 653.88 (above) | 30-day MA: 653.55 (above) | RSI: 32.63 (oversold)
• MACD: -11.99 (bearish) | Bollinger Bands: 608.05–674.39 (oversold territory)
• Support/Resistance: 608.05 (lower band) | 653.88 (200D MA)

Spotify’s technicals suggest a short-term bearish bias amid oversold conditions. The RSI at 32.63 and negative MACD (-11.99) indicate exhaustion in the rally, while the Bollinger Bands signal a potential rebound from the lower band at $608.05. For traders, the 2025-11-28 call options at 610 and 612.5 strikes offer high leverage (60.60%–60.00%) and moderate delta (0.4065–0.3896), balancing directional exposure with time decay (theta: -1.83–-1.83).

Top Option 1: SPOT20251128C610
• Strike: 610 | Expiry: 2025-11-28 | IV: 37.24% | Delta: 0.4065 | Theta: -1.83 | Gamma: 0.0111 | Turnover: 17,578
• IV (37.24%): Elevated volatility suggests market uncertainty
• Delta (0.4065): Moderate sensitivity to price moves
• Theta (-1.83): Aggressive time decay favors short-term plays
• Gamma (0.0111): Responsive to price swings
• Turnover (17,578): High liquidity ensures ease of entry/exit
• Payoff at 5% downside (570.03): Max(0, 570.03 - 610) = $0 (breakeven at 610)
• This contract offers a high-leverage, high-liquidity setup for a short-term rebound trade, with IV and gamma favoring directional bets.

Top Option 2: SPOT20251128C612.5
• Strike: 612.5 | Expiry: 2025-11-28 | IV: 40.09% | Delta: 0.3896 | Theta: -1.83 | Gamma: 0.0102 | Turnover: 10,915
• IV (40.09%): Suggests heightened bearish expectations
• Delta (0.3896): Slightly lower sensitivity but still directional
• Theta (-1.83): Aggressive decay aligns with short-term focus
• Gamma (0.0102): Moderate responsiveness to price changes
• Turnover (10,915): Sufficient liquidity for active trading
• Payoff at 5% downside (570.03): Max(0, 570.03 - 612.5) = $0 (breakeven at 612.5)
• This option provides a slightly more bearish angle with higher IV, ideal for traders expecting a sharp rebound from oversold levels.

Trading Setup: Aggressive bulls may consider SPOT20251128C610 into a bounce above $608.05, while cautious bears could short SPOT20251128C612.5 if the 590 support (SPOT20251128C590) holds. The 200D MA at $653.88 remains a critical resistance level.

Backtest Spotify Technology Stock Performance
We hit an internal error while trying to extract the “-3 % plunge” dates automatically (the calc_merged_event_date service threw a runtime exception). Your data file “spot_daily_indicator.json” has been saved correctly, so nothing is lost—the issue is confined to the follow-on calculation step.To keep moving forward, we have two practical options:1. Retry the automated extraction once the service is stable. 2. Bypass the faulty service and generate the event-date list ourselves, then feed it to the back-test engine manually.Because “intraday -3 % plunge” normally refers to a drop from day’s high to day’s low, we would ideally need intraday (open / high / low / close or minute) data. The file we just pulled contains only close-to-close % changes, so:• If you’re comfortable approximating “intraday” with a close-to-previous-close drop of ≤ -3 %, we can compute the dates from the stored file right now and proceed to the event back-test. • If you prefer the true intraday definition, we’ll need to source high-low data first (and that will require an additional data pull).Please let me know which path you’d like to take (retry the tool, approximate with daily changes, or fetch intraday data), and I’ll continue accordingly.

Act Now: Watch 590 Support and Apple’s Lead
Spotify’s 3.08% drop to $599.51 reflects a bearish reversal despite strong earnings, driven by legal risks and user backlash to price hikes. The technicals—oversold RSI, negative MACD, and Bollinger Band compression—suggest a potential rebound from $608.05, but the lawsuit and operational risks could prolong the selloff. Investors should monitor the 590 support (SPOT20251128C590) and the 200D MA at $653.88 as key inflection points. Meanwhile, the sector leader Apple (AAPL) is down 0.14%, signaling broader tech sector caution. Action: Buy SPOT20251128C610 if 608.05 holds; short SPOT20251128C612.5 if 590 breaks. Watch Apple’s performance for sector sentiment cues.