Spotify Stock Dips 9% After Q2 Earnings Miss and Revenue Fall Short

Spotify Technology S.A. (NYSE: SPOT) experienced a significant stock price drop following its Q2 2025 earnings report, with shares falling nearly 9%. The company reported a 48-cent per share loss, missing analyst expectations of $2.11 per share in earnings and $4.84 billion in revenue. Instead, Spotify reported $4.75 billion in net sales [1]. At press time, SPOT stock was priced at $635.91 per share, above its 52-week average of $519.78. The decline comes after a peak of $775.90 per share on June 26 [1].

Despite the earnings miss, Spotify demonstrated continued growth across key metrics. The company reported a 10% year-over-year revenue increase, a 11% rise in monthly active users (MAUs) to 696 million, and a 12% increase in premium subscribers to 276 million [1]. Gross margin also improved from 31.1% in Q1 to 31.5% in Q2, reflecting a 227 basis point year-over-year increase. Operating income rose by 53% to $468 million, while free cash flow increased by 43% to $807 million [1].

However, the company fell short on several financial expectations. Total revenue of €4.2 billion was below the guided €4.3 billion, and operating income of €406 million fell below the expected €539 million. The primary driver of underperformance was an 8% year-over-year increase in operating expenses, attributed to higher employee salaries, marketing, and cloud infrastructure costs [1].

Looking ahead, Spotify provided a Q3 outlook that also fell below analyst forecasts. The company expects revenue of €4.2 billion ($4.95 billion), lower than the $5.15 billion consensus. It also anticipates adding 14 million new MAUs to reach 710 million, with 5 million of those becoming premium subscribers, bringing the total to 281 million. The expected operating income for Q3 is set at €485 million, a step down from the €539 million forecast in Q2 [1].

The company’s long-term fundamentals remain robust. Spotify has secured the network effect, with artists, labels, and podcasters continuing to view the platform as the go-to destination for streaming. The firm is also investing in AI-driven services such as AI DJ, personalized playlists, and voice translations. While these initiatives increase near-term costs, they are expected to enhance user engagement and future growth [1].

Analysts remain generally optimistic. According to WSJ data, no analysts recommend selling, while 21 out of 32 recommend buying and 11 suggest holding. The average price target stands at $748 per share, implying potential upside from the current price of $635.91 [1].

[1] Source: Spotify Stock Slides After Q2 Miss — But is the Dip a Buy Opportunity? (https://coinmarketcap.com/community/articles/688a41807481f37f58358feb/)