Spotify Stock (SPOT) Dips Into Earnings – What To Expect

Spotify Technology S.A. (NYSE: SPOT) finds itself at a crucial juncture as it prepares to release its third-quarter 2025 earnings report tomorrow. The stock is currently up 0.13% in today's pre-market, but with a concerning slide of 5.32% over the past month. This downturn precedes the earnings release, leaving analysts pondering what the future holds for the streaming giant. The question on everyone's minds: can Spotify deliver on its promises of profitability and sustained growth, or are there deeper issues plaguing the company?

Analysts anticipate a revenue of approximately $4.23 billion for Q3 2025, a 6.12% increase year-over-year. The expected earnings per share (EPS) is $2.14, a substantial 47.6% increase from the previous year. These projections are largely driven by anticipated growth in premium subscribers, estimated to reach 281.2 million, a 7% rise from last year. Recent price hikes are also expected to contribute positively to the average revenue per user (ARPU).

However, the shadow of Q2 2025's performance looms large. While total revenue increased by 10% year-over-year to €4.2 billion, it fell short of analyst expectations, triggering an 11% drop in the stock price. The net loss for the quarter was €86 million, with a loss per share of €0.42, missing the anticipated EPS of €1.90 significantly. While monthly active users (MAUs) grew by 11% to 696 million, ad-supported revenue declined by 1% to €453 million. The company's Q3 revenue projection of €4.2 billion also fell short of market expectations.

To combat these challenges, Spotify has implemented cost-cutting measures and raised prices, aiming to achieve full-year profitability. The company has also been strategically expanding its content offerings, introducing the Audiobooks+ add-on for premium users and extending audiobook services to new markets. These initiatives are intended to bolster subscriber value and attract new users, ultimately driving growth and financial performance.

Despite the recent dip, Spotify's stock has experienced substantial growth year-to-date, rallying 40.7%. Over the past six months, the stock has increased by 1%, and trades near the low end of the range on the period.

While the prevailing narrative focuses on Spotify's growth potential, the question as to whether Spotify has truly cracked the code to long-term, sustainable profitability remains. The dependence on premium subscriptions, while seemingly stable, is vulnerable to economic downturns and increased competition.

Furthermore, the ad-supported revenue decline is a worrying sign, indicating potential challenges in attracting and retaining advertisers. The audiobook expansion, while promising, is a relatively new venture and its impact on the bottom line remains to be seen. Are markets overly optimistic about Spotify's prospects, potentially setting the stage for disappointment if the company fails to meet lofty expectations?

The upcoming Q3 2025 earnings report will be a critical test for Spotify. It will provide crucial insights into the company's financial health, the effectiveness of its strategic initiatives, and its ability to navigate the evolving landscape of the streaming industry. Analysts will be closely watching subscriber growth, revenue performance, and the company's progress in returning value to shareholders.