Why Wall Street Is Going Crazy for Spotify (SPOT)

Spotify (NYSE: SPOT), the world’s leading music streaming business, had a rough time in the second half of 2024 and the first half of 2025. The stock was already trading at a high valuation, and despite consecutive earnings misses, the bulls kept piling on.

Spotify did eventually start living up to analyst expectations again — but it was a case of too little, too late. The pullback that ensued was brutal, and SPOT shares dropped from an all-time high of $770 to where they are now, at around $480. That’s a drop of almost 38%.

A note from our sponsors...

A little over two weeks ago, Spotify delivered another earnings beat. Earnings per share (EPS) came in at $5.24, far outpacing analyst estimates of $3.24. As impressive as the results were, the markets’ reaction was muted. SPOT is trading at roughly the same price it was trading at on the day of that latest earnings call.

But someone did notice — a lot of people, in fact. And they all seem to be concentrated on Wall Street.

Since that earnings beat, multiple top-rated analysts (and we rate them by actual stock picking performance) have come out with price targets for SPOT that imply upside north of 30 or even 40%. 

Here’s what they’re seeing…

And as you can see, that’s only a continuation of a longer trend. So, why are analysts so confident that Spotify has room to run?

Like in most cases, it’s the fundamentals. We built our own in-house quant rating system, which takes into account 115 fundamental factors, so we do have a leg to stand on here. We give stocks simple letter grades — A’s are Strong Buys, B’s are Buys, etcetera.

Why is this important? Because stocks that rank as Buys, like SPOT, for example, have provided an average annual return of 19.88% since the early 2000s — far outpacing the market.

SPOT qualifies for that Buy rating in the Zen Ratings system because it ranks in the top 15% of all stocks when it comes to the fundamentals. But for a more in-depth look at what exactly makes it great, we have to take a look at the Component Grade ratings.

First off — although it’s still far from a value play, SPOT’s pullback has made the valuation more appealing. The Momentum rating is a D, sure — but that’s what you get with strong pullbacks.

Growth is a strong point, however — per an analysis of 22 different growth metrics, Spotify shares rank in the 87th percentile of all equities — that is to say, equivalent to or better than 87% of stocks, or in the top 13%.

You won’t be shocked to hear that SPOT’s coffers are full. We’ve seen meaningful margin expansion and debt repayment in the last year, so the balance sheet puts Spotify in the top 15% of stocks for Financials.

And so we come to the star of the show — the Sentiment Component Grade rating. Here, SPOT ranks in the top 5%. It’s covered by 15 Wall Street analysts — 9 rate it a Strong Buy, 3 rate it a Buy, and 3 rate it a Hold. The average price target is $720 — and implies a 46.83% upside.

So, to answer the question from the title — why is Wall Street going crazy for Spotify? Because the pullback has been immense — and SPOT closed last week in the green, so there are signs that the bottom might be in. As the earnings have shown, a recovery is underway — and to put it simply, this is likely the best price for Spotify shares that we’ll see in a while.

The setup is simple. This is a dominant player in its space — and no one is dislodging Spotify any time soon. The pullback has provided a large discount. For a stock that scores so highly in terms of Growth, the current valuation is more than acceptable. It’s an easy win, and that’s exactly why Wall Street seems unanimously bullish.

It might take a while to play out, but if you’re comfortable with adding a long-term holding to your portfolio, SPOT is worth a closer look.

What to Do Next?

• 77 Best Stocks NOW! >
• See All “A” Rated Stocks with +32.52% Average Annual Return >
• 2 New Stocks to Buy from Steve Reitmeister >

Want to get in touch? Email us at news@wallstreetzen.com.