Spotify Makes $100 Billion Announcement After AI Update
Netflix ($NFLX) is, by far, the most popular streaming video service, with about 325 million paid subscribers worldwide. Netflix maintains its popularity despite several well-publicized price increases, because it consistently provides the content its viewers crave.
Spotify ($SPOT) is the most popular streaming audio service. It’s like Netflix, but for your ears. Spotify has nearly 300 million paying subscribers, and over 760 million active users.
CNET recently declared Spotify the best music streaming service of 2026, citing the company’s vast music library, podcasts and audiobook access.
Spotify Targets $100 Billion
Shares of Spotify vaulted 13% on Thursday, after the Stockholm-based streaming music service updated its guidance through 2030. The company announced its intention to reach 1 billion subscribers and $100 billion in revenue. Spotify is looking for compounded annual revenue growth in the mid-teens, and gross margins of 35% to 40%.
Spotify also announced a deal with Universal Music Group that will allow subscribers to create AI-generated covers and remixes. While Spotify didn’t announce which artists would participate, UMG artists include Taylor Swift, Drake, U2 and The Beatles, among many others.
Double, Followed By a Pullback
We first recommended Spotify nearly two years ago, when it traded near $325. Subsequently, the shares have more than doubled, topping at $785 last year.
Then the stock began to decline. Spotify shares have lost 23% over the past 12 months, and are down 15% year-to-date.
Charting Spotify
Thursday’s news may prove to be the catalyst that reverses the stock’s direction, but first Spotify has some obstacles to overcome.
Thursday’s price action caused the stock to touch a bearish trend line that has been intact since September of last year (black dotted line). There is nearby resistance at $543 (point A), $570 (point B), and at the stock’s 200-day moving average (red), currently located at $575 (point C).
While Thursday’s 13% gain occurred on high volume of 7.3 million (point D), the turnover was lower than the April 28 negative reaction to Spotify’s most recent earnings report (point E). In that report, Spotify’s revenue came in at $5.24 billion for the quarter, barely in line with estimates.
Bottom Line
One year ago, Spotify’s gross margin across all accounts was 31.6%. Now it’s 33.0%. According to the company’s recent comments, that figure should continue to expand to between 35% and 40% over the next few years.
This is an opportunity to own the No. 1 brand in its field as its gross margins expand. We’re staying long Spotify, and will add to our position if and when appropriate.
At the time of publication, Ponsi was long SPOT.
