Spotify Surges 14.75% on Blockbuster Earnings, $5.2B Volume Ranks 16th in Market

Market Snapshot

Spotify Technology (SPOT) surged 14.75% on February 10, 2026, following a blockbuster fourth-quarter earnings report that exceeded expectations. The stock’s trading volume spiked to $5.2 billion, a 163.87% increase from the prior day, ranking it 16th in overall market activity. The rally came despite a 14-month low hit in preceding sessions, underscoring investor enthusiasm for Spotify’s robust user growth, profitability, and strategic initiatives.

Key Drivers

Earnings and Profitability Outperform Expectations

Spotify’s Q4 earnings per share (EPS) of €4.43 far outpaced the €2.74 forecast, driven by a 211% year-over-year jump in net income to €1.17 billion. The company’s gross margin expanded to 33.1%, a record high, confirming its ability to manage costs and pricing power amid rising royalty costs. This margin beat Wall Street’s 32.9% forecast, alleviating concerns about label pricing pressures. Analysts highlighted the “Holy Grail” of margin expansion as a critical factor in the stock’s rebound, with UBS noting the result validated Spotify’s pivot toward higher-margin offerings like audiobooks and podcast advertising.

Explosive User Growth and Engagement Metrics

Spotify added 38 million monthly active users (MAUs) in Q4, the largest quarterly increase in its history, bringing the total to 751 million—a 11% year-over-year rise. Premium subscribers grew 10% to 290 million, despite multiple price hikes in 2024 and early 2025, including a $1 increase in the U.S. to $12.99/month. Ad-supported users also exceeded estimates, reaching 476 million, bolstered by enhancements to the free mobile service. The company’s “Spotify Wrapped” feature saw record engagement, with 300 million users interacting and 630 million social media shares, reinforcing its role as a key driver of user retention and virality.

Strategic Expansions and Pricing Power

The company expanded audiobooks into new markets and introduced music videos for premium users, alongside AI tools to enhance personalization. These initiatives, coupled with successful price increases in key regions, demonstrated Spotify’s ability to monetize its user base effectively. UBS estimated the U.S. price hikes would deliver a 10% average revenue per user (ARPU) uplift, while maintaining low churn. Co-CEO Alex Norström attributed user growth to improvements in the free tier and expansion in Latin America, Europe, and emerging markets.

Cautious Guidance and Foreign Exchange Headwinds

Despite the positive results, Spotify’s Q1 revenue guidance of €4.5 billion fell short of the €4.58 billion estimate, citing a 670 basis point headwind from foreign exchange rates. The company also guided for 3 million premium subscriber additions in Q1, below the 4 million consensus forecast, sparking initial selling pressure. However, analysts like Jefferies argued the miss was seasonal and aligned with historical patterns, while Canaccord noted the reduced guidance reflected valuation recalibration rather than operational weakness.

Analyst Reactions and Valuation Considerations

Following the earnings report, several analysts lowered price targets but maintained Buy ratings. Jefferies cut its target to $650 from $750, citing valuation adjustments, while Canaccord reduced its objective to $750 from $850. KeyBanc attributed the revisions to FX risks and competitive pressures from Apple Music and Amazon Music. Despite these cuts, the stock’s 14.75% surge and €4.37 price-to-sales ratio were seen as attractive relative to peers like Netflix, which trades at a 7.7 multiple. Analysts emphasized Spotify’s free cash flow generation (€2.3 billion in 2024) and low churn as long-term positives, though near-term challenges include FX volatility and margin pressures from label negotiations.

Technical and Market Sentiment

Spotify’s stock traded in a volatile range on February 10, hitting an intraday high of $495.41 before settling at $477.10. The 62.26-point gain marked a significant rebound from 14-month lows, though technical indicators remained mixed. While the rally signaled optimism about the company’s monetization strategy and user base, the intraday swing of $80.38 highlighted lingering uncertainty about valuation sustainability. Analysts noted that the stock’s performance would hinge on its ability to maintain pricing power, expand gross margins, and navigate competitive dynamics in 2026.